FSE Cardiff: Advisers shouldn’t give buy-to-let tax advice

The tax implications of buy-to-let will become more complex from 2017 to 2020, when the amount of mortgage tax relief higher rate taxpayer landlords can claim back will be gradually cut from 45% to 20%.

Mortgage advisers shouldn’t get drawn into offering tax advice – especially when comparing individual and limited company buy-to-let, two experts said at FSE Cardiff today.

The tax implications of buy-to-let will become more complex from 2017 to 2020, when the amount of mortgage tax relief higher rate taxpayer landlords can claim back will be gradually cut from 45% to 20%.

Both Roger Morris, sales director at Precise Mortgages and Liz Syms, owner of Connect for Intermediaries, reckoned mortgage advisers should direct clients to tax advisers and accountants or they could find themselves in hot water.

Morris said: “Mortgage advisers are not tax advisers however any mortgage you do now is a ‘tax vehicle’ for those buy-to-let clients.

“Think about the advice process – you can’t say we don’t give tax advice but then carry on doing buy-to-let mortgages because any mortgage you arrange will directly affect the client’s tax position and tax coding.”

Syms said: “We know some advisers are providing two illustrations, one for an individual buy-to-let mortgage and the other for a limited company.

“They are then keeping these illustrations on file, along with the recommendation, and the proof that they asked the client to seek the necessary tax advice.”

She added: “Brokers need to know exactly what the lenders’ criteria is around limited companies and HMOs.”