Further to our earlier note, we’ve had an observation from Philip Nickson, FCA, one of our readers, which we’d like to share.
Philip draws attention to the fact that the arithmetic effect of replacing a tax deduction for interest in computing BTL rental income with a basic rate tax credit is to increase “top line” income. Most people will have realised that this potentially affects exposure to higher rates of tax and the availability of personal allowances: Philip adds that it will also apparently affect the “adjusted net income” computation used for assessing the scandalously badly-drafted “High Income Child Benefit Charge”.
In effect, for HICBC purposes, relief for affected interest will not simply be restricted but withdrawn altogether, and it will become very easy for a landlord to lose Child Benefit despite being in receipt of what any sensible person would consider to be a modest amount of income.
We can sense a wide consensus of opinion building against this proposal: perhaps it’s not quite a done deal yet.