Relief for finance cost on BTL

AskAsk

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

Bookworm105

how much is the profit ?
relief is restricted to lower of profits x 20% or finance cost x 20%
unused costs then carried forward 

Dazed_and_C0nfused

AskAsk said:

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

If your BTL profit (for tax purposes) is only £1,717 what were you expecting?

AskAsk

Bookworm105 said:

how much is the profit ?
relief is restricted to lower of profits x 20% or finance cost x 20%
unused costs then carried forward 

The profit was £8,214 so it seems odd.  The restriction seems to be related to the amount of income that I pay basic rate tax on.  I did see that you can carry any unused finance costs that had not been relieved to the next year, but it doesn't help that I am selling the property in the next year so there is little profit to declare!

AskAsk

Dazed_and_C0nfused said:

AskAsk said:

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

If your BTL profit (for tax purposes) is only £1,717 what were you expecting?

The profit was £8,214

Dazed_and_C0nfused

AskAsk said:

Dazed_and_C0nfused said:

AskAsk said:

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

If your BTL profit (for tax purposes) is only £1,717 what were you expecting?

The profit was £8,214

Did you have losses to carry forward and set against that?

Or spare Personal Allowance which limited the amount that ended up being taxed at basic rate?

If not could you copy the whole of the top part of the tax calculation which includes this?

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Grumpy_chap

AskAsk said:

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

Is the £5,324 all finance cost (interest) or do those payment include any capital repayment?

AskAsk

Dazed_and_C0nfused said:

AskAsk said:

Dazed_and_C0nfused said:

AskAsk said:

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

If your BTL profit (for tax purposes) is only £1,717 what were you expecting?

The profit was £8,214

Did you have losses to carry forward and set against that?

Or spare Personal Allowance which limited the amount that ended up being taxed at basic rate?

If not could you copy the whole of the top part of the tax calculation which includes this?

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

No spare personal allowance or losses.  I may have to call HMRC.  I haven't had this problem before as interest rates have been low.  This is the first tax year where the mortgage interest payment has been quite high.

I have had a very high savings interest this year though, which seems to affect this balance figure of £1,717

AskAsk

Grumpy_chap said:

AskAsk said:

I have completed my self assessment for 2023/24 and I am not being given the full 20% relief of the finance cost that I had paid for the BTL property.  I had paid £5,324 but it restricts this to £1,717 before the 20% is applied.

This £1,717 appears as the first figure in my basic taxable amount under "Pay, pensions, proft etc"

Does anyone know why this is the case?

Is the £5,324 all finance cost (interest) or do those payment include any capital repayment?

It is all finance cost.  it is an interest only mortgage.

[Deleted User]

Maybe reading this incorrectly but if the amount upon which you are liable to tax is £1717 in the final calculation you can only claim interest relief on £1717, reducing the tax to zero. 

Not clear from the explanation provided.

AskAsk

[Deleted User] said:

Maybe reading this incorrectly but if the amount upon which you are liable to tax is £1717 in the final calculation you can only claim interest relief on £1717, reducing the tax to zero. 

Not clear from the explanation provided.

The £1,717 is the item in the "view your calculation" print out under Pay, pensions, profit etc that is subject to 20% tax.  The rest of the income is taxed at other rates as my total taxable income for the year is £55,951 after the personal allowance deduction.