The rules for tax relief on loan interest for landlords have changed a lot in recent years. Many landlords are unsure what they can still claim. If you rent out property, it’s important to understand the rules so you don’t pay more tax than you need to.

Can Landlords Still Claim Tax Relief on Loan Interest?

Some landlords think tax relief on loan interest is gone. That’s not true. The rules have changed, but you can still get some relief.

Most landlords now get a 20% tax credit on the interest they pay in a tax year. This is not as good as before when you could deduct all the interest from rental income.

The new rules mainly affect people with total income (including rent) over £50,000. When working out rental profit, the loan interest is not deducted first. Instead, you get the 20% credit at the end.

What Does This Mean for You?

If you earn less than £50,000 a year, the change may not hurt you much. But if you’re a higher-rate taxpayer, you will pay more tax. The credit often does not cover all the extra tax on your rental income.

Tax Relief for Repairs: What You Can Claim

Aside from tax relief on loan interest for landlords, repairs are another way to save tax. Most landlords know they can claim for repairs. But some costs are not classed as repairs.

HMRC says:

• Big improvements, like building an extension or adding bedrooms, are capital costs. These cannot be claimed as an expense now. They are added to the property value for future capital gains tax relief.
• Repairs done while a property is empty may also count as capital costs, not tax-deductible expenses.

For example, if you spend £10,000 on double glazing, HMRC may say it’s an improvement, not a repair. A tax advisor may suggest splitting it — claim part as a repair now and treat the rest as a capital cost.

How to Save More on Property Taxes

The rules for tax relief on loan interest for landlords are more complex than before. To save money, you should:

Get advice to use the 20% loan interest relief the right way.

Know which costs count as repairs and which are improvements.

Plan spending before the tax year ends.

Need Expert Advice on Landlord Tax Relief?

If you’re unsure about how the tax relief on loan interest for landlords rules affect you — or you want to make sure you’re not overpaying tax on your rental income —you can read more about this on the government website by clicking here or by speaking to a tax advisor.

If you would like any property advice, give us a call today to book in a chat by clicking here.