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Property income and loan interest deductions

17 November 2020 / Tim Good
Issue: 4769 / Categories: Comment & Analysis
32003
Annoying algorithms

Key points

  • Unrelieved finance costs may generate a tax reduction.
  • The relevant legislation is in ITTOIA 2005 and ITA 2007.
  • Working through the tax calculation steps.
  • Calculating the loan interest tax reducer.
  • Does HMRC follow ITTOIA 2005 s 274AA(6)?
  • The policy objective of the legislation.

Calculating the amount of tax relief for a landlord’s finance costs should be straightforward but does HMRC know how to do it? Let’s approach the subject as an examination question and to make it as easy as possible it will be an open book exam. Oh – and it’ll be multiple choice. To spice things up our fictional client could benefit by several thousand pounds if we get things right. The question concerns the tax liability for our...

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