BTL interest - full or after deduction?

movilogo

Hello

First time filling SA as BTL landlord.

Now there is a field for total mortgage interest amount against the rental property.

Do I have to put there full mortgage interest amount
or
After deducting 25% of mortgage interest (for 2017-18)?

I am a higher rate tax payer.

Here is how the SA screen looks at HMRC website.

https://imgur.com/a/0eXRI4n

When I click on [?] icon besides "Loan interest and other financial costs" I get following message in a separate window.



Residential property
For the 2017 to 2018 tax year, you can only claim 75% of the cost of getting a loan, or alternative finance to buy a residential property that you let, and 75% of any interest on such a loan or alternative finance payments.

For example if you incurred £4,000 in interest on such a loan:

enter £3,000 (75% of £4,000) here
enter £1,000 (25% of £4,000 in "Residential finance costs not included in Loan interest and other financial costs". This will be used to calculate a reduction in your income tax
For more information on the residential property finance costs restriction, go to Tax relief for residential landlords: how it is worked out.



Where do I get the "Residential finance costs not included in Loan interest and other financial costs" field?

[Deleted User]

Does this help? (the final box)

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/690391/sa105-Notes-2018.pdf

movilogo

That PDF is for paper return I believe. I can't find the equivalent boxes for online return

put £1,000 (25% of £4,000) in box 44 - this will be used to calculate a reduction in your Income Tax

Where is box 44 for online return?

[Deleted User]

Last page of online form - see section in bold (I presume that you did not progress this far?) - property section reads as follows:

Profits and losses for other property income
Use the help icons (?) next to each box for more information. Please note that if you open the help by selecting the icon you will need to close this before opening another.Help about: Help icons - opens in a new window

Adjusted profit for the year: £
Loss brought forward used against this year's profits:£
Help about: Loss brought forward used against this year!!!8217;s profit - opens in a new window
Taxable profit for the year: £ Adjusted loss for the year £
Important: Any property losses included here must be from qualifying activity and or qualifying Capital Allowances. Read help. HMRC Help - opens in a new window

Loss set-off against 2017-18 total income (this will be unusual):£
Help about: Loss set-off against 6 April 2017 to 5 April 2018 total income - opens in a new window
Loss to carry forward to following year, including unused losses brought forward:Help about: Loss to carry forward to following year including unused losses brought forward - opens in a new window £ 0.00
Residential finance costs not included in 'Loan interest and other financial costs':£

Lisa1978

yes the above is correct, I have put the 25% into the highlighted area.


What have you done with the 20% mortgage interest relief that is available? I am due tax relief of 20% on £915 (which is 25% of total mortgage interest £3660) = £183 but there is nowhere to put it unless HMRC take this into account when calculating tax due?

[Deleted User]

Lisa1978 wrote: »

yes the above is correct, I have put the 25% into the highlighted area.


What have you done with the 20% mortgage interest relief that is available? I am due tax relief of 20% on £915 (which is 25% of total mortgage interest £3660) = £183 but there is nowhere to put it unless HMRC take this into account when calculating tax due?

It will be calculated for you - see the note below on the manual form.

Box 44 Residential finance costs not included
in box 26
Put the remaining 25% of residential property
finance costs which you didn’t include in box 26
in box 44 – see the working sheet for box 26.
This amount will be used to calculate a reduction
in your Income Tax.

Lisa1978

Fantastic, thank you! I have been trolling the internet for this info. Much appreciated. I can now submit my SA without worrying i'll be charged the higher amount