AMENDED: self assessment error: basic rate div tax not for mortgage interest?

Dazed_and_confused

Gov.uk would suggest otherwise. The third rule would seem to be your problem.

https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords

Individuals will be able to claim a basic rate tax reduction from their Income Tax liability on the portion of finance costs not deducted in calculating the profit. In practice this tax reduction will be calculated as 20% of the lower of the:

finance costs not deducted from income in the tax year (25% for 2017 to 2018, 50% for 2018 to 2019, 75% for 2019 to 2020 and 100% thereafter)

profits of the property business in the tax year

total income (excluding savings income and dividend income) that exceeds the personal allowance and blind person’s allowance in the tax year

Any excess finance costs may be carried forward to following years if the tax reduction has been limited to 20% of the profits of the property business in the tax year.

silvercar

Any excess finance costs may be carried forward to following years if the tax reduction has been limited to 20% of the profits of the property business in the tax year.

Does this mean I should carry it forward to next year? I'm not sure as my excess finance costs have been limited to 0.

polymaff

polymaff wrote: »

AIUI the change this measure introduces over the next four years is that Landlords' finance charges will be steadily and increasingly extracted from the profit calculation and will instead be relieved explicitly.

This means that Landlords will not be able to relieve themselves at their highest tax rate but will receive a direct tax rebate on the lesser of either the interest extracted or their amount of non-savings taxable income taxed at basic rate - at basic rate.

silvercar wrote: »

That was my understanding too, but I thought that dividend income would be relieved at basic rate for basic rate tax payers.

So I have paid tax on dividends and am a basic rate taxpayer and the mortgage interest is an allowable expense restricted to basic rate, but I can't get it back!

Well, that [the post of mine you quote] WASN'T your understanding - as it is clear from that post that the only type of income addressed by this process is non-savings taxable income.

silvercar

polymaff wrote: »

Well, that [the post of mine you quote] WASN'T your understanding - as it is clear from that post that the only type of income addressed by this process is non-savings taxable income.

The first paragraph was my understanding!

polymaff

silvercar wrote: »

The first paragraph was my understanding!

Hence my smiley face.

When I reply to forums I try to do two things: Directly address the questions asked, one by one, and, faced with a hungry questioner, I try to teach them how to fish rather than just chuck a fish at them.

Hopefully, that is the better value approach - but it also gets around having to rely on too much of the poster's stated facts and assumptions - like your dodgy £11k.


My version of "If I wanted to get there, I wouldn't start from here", I guess.