Landlords paying higher rate income tax will no longer be able to deduct all of their mortgage interest/finance costs from their rental profits. Instead, they will effectively receive a basic rate reduction. This restriction will be phased in over four years starting from April 2017.

In addition to the above, the 10% ‘wear and tear allowance’ will be reformed and replaced with a new relief that allows residential landlords to deduct the actual costs of replacing furnishings.