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BTL landlords to face an average 13% increase on taxable profit

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According to a study from online letting agent Upad.co.uk (and reported in the FT Adviser) one in five landlords intend to increase rents as a result of tax changes within the buy-to-let sector.

The survey says that landlords will experience an average 13% increase in their taxable profit from 2017 to 2018 to 2018 to 2019 – which could lead to them passing on the extra financial burden to tenants.

The withdrawal of tax relief – which started being phased in from this tax year (6 April 2017) - means that by April 2020, it is likely that higher-rate taxpayers will only receive 50% of the relief that they currently get.

By 2020, 100%of buy-to-let finance costs will be restricted to the basic tax rate of only 20% - so some landlords may find themselves being tipped into the higher tax bracket even if their income does not increase - potentially leaving many letting their property at a loss.

While industry commentators suggest there are option for landlords - such as incorporating a buy to let business or switching to fully furnished holiday lettings as these are exempt from the tax changes - James Davis, chief executive at Upad.co.uk, said: “Landlords should also look at ways to negotiate with their letting agent and be vigilant to agents trying to increase their commission or other fees, as they look to flesh out their profits following the ban on tenancy fees”.

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