Property landlords are already facing a number of changes, which have applied with effect from 6 April 2017.
For many landlords their tax liability on rental income is based on net cash receipts from their property business, unless they elect otherwise. Where the cash basis applies, the tax-deductible finance costs are restricted if the amount owed at the year-end exceeds the cost of properties held when acquired for the property business. There may be a comparable restriction if the cash basis is not applicable, but it is likely to be more flexible. This restriction is separate to the provision that confines the income tax relief for part of the finance costs of landlords of residential property to 20%. The proportion affected is 25% in 2017/18, 50% in 2018/19 and will rise to 75% for 2019/20 and 100% subsequently.
This also applies to interest on loans used to provide capital for partnerships letting residential property.