Key Trends for Landlords to Watch in the 2022/23 Tax Year

Posted by Market Financial Solutions on 6th April 2022 -

The new tax year begins next week. On 6 April, to be precise.

• But what do property investors, landlords and brokers need to know about the 2022/23 tax year?
• How MFS can assist property buyers in the year ahead through flexible finance solutions and competitive bridging loan rates?

We answer both of these questions below.

Tax considerations

1) Tax rates

What will the tax rates be for 2022/23? This is one of the most common questions that landlords ask. The table below provides an overview:

The tax rates for the coming financial year are the same as those for the one that is soon-to-end. In fact, the Government has said that these tax bands and rates are set to remain at this level until 2026.

2) Capital gains tax

It also important to remember that, in the Autumn Budget in late 2021, the Government doubled the time property investors had to report and pay capital gains tax. In the 2022/23 tax year, landlords and investors who sell a residential property will have 60 days (up from 30) to complete the capital gains tax process.

3) Mortgage relief and tax credits

When the new tax year starts on 6 April, it will have been five years since the mortgage restriction tax changes were introduced. Buy-to-let mortgage tax relief has now been reduced to zero. Instead, during the 2022/23 tax year, landlords will receive a 20% tax credit on interest payments.

It is worth noting that the mortgage restrictions only apply to individuals. That is why many people choose to purchase buy-to-let properties through a limited company, where they are effectively taxed on profit rather than income.

According to data from Companies House, 47,400 new buy-to-let companies were incorporated across the UK in 2021 – a record for a single year. There are now approximately 269,300 such companies, which is up 61% since April 2017, when mortgage interest relief was withdrawn. This trend is likely to continue during the 2022/23 financial year.

Source: Property Industry Eye