Buy-to-let landlords claimed £18.5bn in tax relief in 2021, a sizable amount considering much of the money they can recoup has been taken away by the government.

Before 2017 landlords could deduct their full mortgage interest costs when calculating their tax bill, but now they only receive a tax credit of 20% of the mortgage interest payments.

Ludlowthompson calculated that loan interest made up 37% of tax reliefs claimed by buy-to-let landlords, which is equivalent to £6.9bn.

This was followed by property repairs, maintenance and renewals at 24% of total tax reliefs at around £4.5bn.

Shortly, landlords will be able to claim tax relief when making green upgrades to their homes which improve their home’s Energy Performance Certificate, as the government looks to up the EPC levels of rental properties to at least C.

The government is currently putting a bill through parliament which could make a minimum EPC level of C a requirement for existing tenancies by 2025 and for new tenancies by 2028.

Stephen Ludlow, Chairman of ludlowthompson says:

“There are currently no specific reliefs available to help landlords improve the energy efficiency of their properties in time for the deadline. Landlords may be able to make careful use of the repairs, maintenance and renewal allowance to replace fixtures such as boilers with more energy-efficient models.”

“There is a strong argument that the government should provide more generous tax benefits for property improvements. This would incentivise landlords to make upgrades which would improve the overall quality of UK housing stock.”

He added: “Despite changes to tax reliefs, buy-to-let landlords claimed back an increased amount from the taxman in the last year.”

“Within an inflationary environment, buy-to-let remains an attractive investment because landlords have the opportunity to increase rents in line with wage growth.”

See also today’s other landord story:

Buy-to-let tax changes five years on – survey points to impact on landlords, and tenants