Tax changes for residential property landlords

Changes to the mortgage interest rate tax relief that began in 2017 will have a huge impact on this industry by 2020/21.

The announcement of the changes to the mortgage interest tax relief for individuals with residential property lettings was first announced in the Autumn of 2015 and was a huge blow to those landlords either in or just under the higher rate tax band, as well as those with very high mortgages.

The changes were due to be phased in which meant there was plenty of time to work on different strategies. 

The challenge was to save our clients almost £1m in extra income tax and also save the business he’d worked so hard to build over 20 years.

 However, another shock announcement in the March 2016 budget, regarding extra stamp duty charges, meant that to eliminate even further costs the restructuring would need to be undertaken within 2 weeks.


In January 2016 we started work on plans to restructure the business. We undertook a cost benefit analysis of either setting up a property management company or transferring certain properties to the clients limited company in the most cost effective and tax efficient way.

The transfer of properties came out as the best long term option.

This process of the transfer had to take account of properties with the highest mortgage interest, the lowest capital gain and the rates of the new commercial mortgages in order for it to work.

The problem then was to get solicitors and the mortgage company to complete the transfer of ownership on 23 properties within 2 weeks, in order to avoid the huge stamp duty land tax costs taking effect on 1 April.

After a stressful few weeks the transfers were all completed at 5pm on 31 March!

There was no resulting capital gains tax to pay, no stamp duty and we’d saved our clients almost £1m in future income tax.