Clause 24 Solutions – Property Tax

Clause 24 solutions do exist

I have written two previous blogs on Clause 24 solutions. The first one can be found by clicking this LINK and the second HERE.

Clause 24 solutions

The main components of clause 24 affecting the residential landlord are:

  • Removal of the 10% wear & tear allowance. This is effective from 6th April 2016. From now on you can only claim tax relief on what you actually spend on repairs to your property. There is not a lot that can be done to overcome this change.
  • Removal of loan interest relief. This will be phased in from 6th April 2017. By 2020 interest will no longer be a tax allowable expense if you hold residential property in your own name. Instead you will get 20% tax relief on your interest against your tax payable. This is by far the most damaging part of clause 24.

Those potentially affected

  • Anyone who has gross rents above the basic rate, 20%, tax threshold, £42,900 for 2016-17.
  • Anyone who has a job and gross rents, both totalling over £42,900 for 2016-17

If you are currently a 20% tax payer clause 24 could put you in the 40% tax bracket. That means you will pay more tax. Which could mean that you have negative cash flow from your properties. There are many classifications of property investor e.g full time, part time, accidental landlord etc… If your rents are above the basic rate threshold you will pay more tax.

The National Association of Landlords predicts that landlords are threatening to sell off 500,000 properties in 2017 as a result of clause 24. An article published by the TELEGRAPH in February 2016 discusses the NLA prediction. There is now consensus of a drive to corporatize the residential property rental sector. So you can now expect to see large corporations building new residential houses and renting them out.

Clause 24 solutions

You don’t have to be a landlord that sells your assets because of the effects of clause 24. There are a number of clause 24 solutions supported by tax case law and UK statute. That means that HMRC won’t have grounds to challenge. What you do have to do is to make sure all the paperwork is done correctly.

Crunching the numbers will tell you two things:

  1. The impact of clause 24 on your personal circumstances
  2. The best route map to side step clause 24

All the clause 24 solutions we provide ultimately lead to having your assets in a corporate structure. If you qualify we can even help you totally avoid paying inheritance tax. We can help you crunch the numbers and find a route map for your specific circumstances. Contact us for a free consultation on our clause 24 solutions or call Aadil below.


Mr Aadil Butt FCCA

Mobile: 07792 542 944


1 Comment

  1. Capital Gains Tax changes impact on property investors

    22 July 2020 at 11:10 am

    […] Possible reasons for this maybe that HMRC do not have an effective mechanism of debt taxation. This meant that many property investors were refinancing their properties, claiming interest relief on the refinance, and using the money in part to have a lavish lifestyle without paying any tax. Another reason, and probably more relevant to the governments eagle eye on the property sector, is they want to create more transparency and accountability thus discouraging the small property investor and encouraging corporations. As clause 24 does not apply to limited companies, many property investors with large portfolios have incorporated their businesses. Take a read of our article on possible solutions for Clause24. […]


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