August questions and answers

Newsletter issue - August 2018.

Q. As a landlord with several rental properties, is there anything I should be considering to help mitigate the impact of the restrictions on mortgage interest relief?

A: Restrictions on the amount of income tax relief certain landlords can obtain on residential property finance costs (such as mortgage interest) are currently being phased in (over four years starting from 6 April 2017).

Deductions for finance costs related to residential property will be restricted as follows:

  • in 2017/18, the deduction from property income is restricted to 75% of the finance costs;
  • in 2018/19, the restriction is 50%;
  • in 2019/20, the restriction is 25%; and
  • from 2020/21 onwards, no such finance costs incurred by a landlord will be allowed as a deduction. They will be eligible to receive a basic rate tax deduction on up to 100% of the finance costs incurred.

In order to mitigate the impact of these restrictions, you may wish to consider the following actions:

  • legally transferring some of your rental income to someone else (for example, a spouse or civil partner);
  • reducing your borrowings, which in turn will reduce future interest payments;
  • incorporating your property business; or
  • turning your rental property into qualifying furnished holiday lettings (the restrictions do not apply to this type of property business).

Professional and legal advice is of course, strongly recommended before making any changes.

Q. I am considering buying an all-electric vehicle, which I would use to travel to and from work. If my employer installs a charging point at work, will this be a benefit-in-kind for tax purposes?

A: Where an employer provides facilities for charging their employees' all-electric or plug-in hybrid vehicles at the workplace, this is currently treated as a taxable benefit-in -kind subject to income tax for employees and employer Class 1A National Insurance contributions.

However, the government announced in Autumn Budget 2017 that it would introduce an exemption to remove any income tax or NIC liability for charging electric vehicles at work with effect from 6 April 2018. The draft legislation is contained in Finance Bill 2018-19 and is under consultation until 31 August 2018.

There is already an exemption for the provision of charging facilities which applies to taxable cars and vans.

Q. My company borrowed money from another private company, but the loan has now been written off because the lender company has been dissolved. What are the tax implications of this write-off?

A: A company will have a trading loan relationship, as a borrower, if it entered into the loan relationship because of its trade. So, for example, a loan taken out to purchase machinery for a manufacturing trade, or to finance an expansion of its trade, will be a trading loan relationship.

Debits and credits arising from a trading loan relationship for an accounting period, are

  • treated as receipts and expenses of the trade, and
  • taken into account in computing profits or losses of the trade for that period.

The legislation provides that any debit may be deducted in the computation of trading profits, regardless of whether it relates to capital or income or would otherwise be disallowed by CTA 2009, s 54 (the 'wholly and exclusively' rule).

In most cases, if the companies are connected, there will be no tax implications for your company. However, if the companies are not connected, your company will be subject to tax for the amount of the write-off.

For further guidance on the loan relationship rules for connected parties, see the HMRC Corporate Finance Manual at CFM35320.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."


  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size



Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: