Benefits of Tax Saving Trust Declarations
- Landlords should examine their income and expenditure for opportunities to reduce the amount of tax payable to HMRC
- Withdrawal of finance costs as a fully deductible allowance started in tax year 2017-18 – that allowance was withdrawn by 2020-2021.
- Landlords receive a basic rate of tax relief at 20% of the finance costs. It is important to note that the following has applied since tax year 2017-18.
Options
There are many options for a landlord to consider with the objective of minimising the effects of the removal of the finance costs.
However , the most straight forward method is to utilise a Trust Declaration to agree beneficial interest in the rental property with a spouse, partner or other family member thereby allowing all the rental income to be allocated to that person and taking advantage of any unused personal allowance or lower tax band. The resulting tax savings can be very significant.