By Keith Johnston, Tax Director, Armstrong Watson Northallerton

AS many landlords will be aware, the Government has over a number of years increased the tax burden of property ownership, particularly residential property, and from April 6, the government will now further reduce the deemed occupation period allowable under Principal Private Residence relief and remove Lettings Relief, which could considerably increase the amount of Capital Gains Tax a landlord will pay.

Property can still be a useful investment vehicle, and many people like this style of investment because it is tangible, however, given that the Government is focusing on landlords, some may be considering if it is still worthwhile.

Whether you are intending to continue letting property, looking to alter your investment portfolio or sell property, there are a number of tax consequences to consider.

Loan Interest: Since 2017, the Government has restricted the amount of loan interest relief available against rental income. As a result, from April 6, landlords will only be given a basic rate tax deduction of 20 per cent, compared to 40 per cent or 45 per cent in previous tax years if you were a higher rate taxpayer.

Property Sales: Residential property sales are subject to Capital Gains Tax rates of 18 per cent or 28 per cent, compared to ten per cent or 20 per cent for other investments. In addition, from April 6, the Government will reduce other reliefs which are currently available if you previously lived in a property.

Reporting: Currently Capital Gains Tax is payable by January 31, of the tax year following the year of disposal, however, from April 6, there will be additional reporting requirements where the period within which to report the gain to HMRC for residential property sold will reduce to only 30 days.

Property Purchase: If you are considering purchasing an additional property there is also the higher Stamp Duty Land Tax to consider.

Of course, the above only highlights the potential tax implications of holding property and you also need to consider the return on your investment, especially when compared to the negligible savings rates you receive from banks currently. As with all investments, I would strongly recommend speaking to a financial adviser before any decision is made.

If you are concerned about the tax implications of owning property, call Keith Johnston on 01609 702000 or email