Changes in Tax for Landlords and All You Need to Know in 2022
As we enter a new year, it often means new rules and challenges on the horizon. This is why we have put together this list of what landlords need to know in 2022. From changes in tax for landlords to adjustments to evictions and deposit schemes, this year could see a number of different hurdles for landlords to navigate, so make sure you read this article and prepare yourself for another 12 months in the world of the private rental sector.
Changes in Tax for Landlords
Your 2020-21 tax return is due on 31st January 2022, and it will be the first on which the mortgage interest tax relief is applied in full. HMRC has phased this in over the last few years and it has angered many landlords, as you can now only offset 20% of your mortgage interest payments against your tax bill.
Brighter news, though, comes in the form of an extension for reporting and paying capital gains tax on sales of buy-to-let properties. Whereas previously you had just 30 days to report and pay, you now have 60 days after disposal to meet your obligations.
From April 2022, all VAT-registered businesses, including landlords and letting agents, will have to submit their tax information using a digital tool that is compatible with HMRC’s systems. This next step of the government’s Making Tax Digital scheme will extend to all businesses and people that fill in self-assessment tax returns from 2024.
Make sure you are ready for changes in tax for landlords by reading up on the changes and talking to your accountant.
Buy-to-Let Mortgages
The cost of buy-to-let mortgages is likely to rise in 2022. After a long period during which the Bank of England held interest rates at a record low of 0.1%, it made the decision to raise them to 0.25% in December 2021 in the face of growing inflation.
If you have not already seen your mortgage rise, it might do so in the coming weeks. There is also no guarantee that this will be the last increase in rates, as the country emerges from the pandemic and financial experts look to battle rising costs.
Changes to Landlord Evictions and Deposits
Landlords have been braced for the Renters’ Reform Bill since 2019, but it has yet to come into action. The coronavirus pandemic has delayed this legislation, but it is thought that 2022 is the year it will finally happen.
The main element of the proposed bill that has concerned landlords is the scrapping of Section 21 evictions. These ‘no-fault’ evictions allow landlords to take possession of the property back at the end of the tenancy with two-months notice and without having to give a reason. Section 8 evictions will remain, allowing repossession in cases of unpaid rent, antisocial behaviour, damage to the property and similar situations.
Additionally, the bill is likely to pave the way for a ‘lifetime deposit’ that transfers between tenancies, allowing the tenant to move without having to save for another deposit.
Ready for Changes in Tax for Landlords and Other Rental Adjustments?
With so much to prepare for, you may find yourself running out of time to complete all the necessary paperwork. This is where we come in. Outsource your property management to us and we will take care of that side of the business, leaving you more able to meet your other legal obligations. Call us today to find out how we can help you.
