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Buy-to-let tax loopholes: how landlords can keep more of their income


Landlords have had a difficult year so it is more important than ever it know about these underused reliefs

By Marianna Hunt and  Rachel Mortimer

This is a three-part series about how landlords can save money on their tax bill. In this second instalment we find out how to pay less tax on your rental income. Read the others to find out how to reduce your tax liability when holding a property and when selling up.

Many landlords are missing out on valuable tax breaks that could prevent a large chunk of their income ending up in the hands of HM Revenue & Customs.

Reliefs on landlords’ income, such as being able to offset their mortgage costs against their tax bill, have gradually been hacked back – and buy-to-let owners are now wondering whether the numbers still add up.

But there are a number of often underused reliefs still available which are now more important than ever.

Make use of little-known expenses

Many landlords are unaware that they may be able to claim back for expenses such as the cost of travelling between their rental properties and phone calls made or texts sent in connection with the property. Those with a monthly contract can expense only the proportion of time that they use it for business purposes.

It is also possible to claim back the cost of subscriptions to property investment magazines, services and money spent on advertising the property, or legal and accountancy fees connected to the buy-to-let. As you can see using the calculator below, deducting these kinds of expenses from your income can make a big difference.

Zena Hanks of Saffery Champness, an accountancy firm, said: “It may seem like a hassle to keep track of these small expenses but doing so will make HMRC much more likely to accept them. It’s important to remember that expenditure must be wholly and exclusively for the purpose of the business.”

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