Buy-to-let: 5 Ways To Slash Tax

Following the recent changes to taxation, we frequently get asked about the best options for landlords to keep their investment profitable for the years to come. We have put together a straightforward guide with the most important things you can look into as a Landlord to make the best of your investment.


As interest rates are currently at an all time low, it might make sense to look into the most attractive offers on the market and refinance your investment. The simple re-mortgage at new interest rates might slash a hefty chunk of your costs.

Exploit your spouse’s personal allowance

If your spouse is not working, you may be able to assign part or all of the rental income to them, allowing them to exploit their personal tax allowance, due to rise to £12,500 by 2020, or 20% tax band.

Become a company

The Government is cutting corporation tax to 19% in 2017 and 18% in 2020, just as the buy-to-let changes bite. If you are a higher-rate taxpayer, one option to  cut your bill might be to invest via a company. This is not difficult, and can be arranged by your solicitor. But proceed with caution, as there can be complications – read more on our recent post on becoming a company here.

The corporation tax rate isn’t the only advantage. All costs can be offset against rental income, so in theory profits may be further improved. However, income can only be paid out to the directors as a dividend. From next April they can each receive £5,000 annually tax free. After that, dividends paid to higher-rate taxpayers are reduced by 32.5%, while basic-rate taxpayers pay a 7.5% dividend tax.

Selling property and reducing loans

It is important to take a good look at your portfolio and only keep the property that produces the best yields. It might also be worth selling one property to cover mortgage or reduce borrowing for the others.

Raise rent

We have been speaking to many landlords who believe rents will have to rise. Landlords are considering increasing rents to pay for the higher taxes they now face.

For sales and lettings in Glasgow and beyond, contact our friendly Vanilla Square team. Whether selling or letting property, you will always be liaising with one of our business partners, which makes our service that much more responsible and approachable. When you instruct us, your property will reach a wider audience as we are one of the few agents who are present on all the major property portals to offer sellers and landlords maximum exposure. If you’re looking to buy, sell, rent or lease your property, or you’re simply considering the idea, contact us by calling 0141 229 0210 or pop into our new office at 711 Great Western Road. One of our partners will be delighted to help and provide you with impartial, expert advice.