Income Tax Act 2007 section 399A

Property partnerships: restriction of relief for investment loan interest

Section 399A restricts the income tax relief an individual partner can claim for interest on a loan used to invest in a partnership that carries on a residential property letting business, phasing the relief down to nil over four tax years.

• Applies where an individual borrows to invest in a partnership that generates rental income from residential dwellings (including land being constructed or adapted to create dwellings)
• Relief for the portion of loan interest attributable to the residential property business was progressively reduced: 75% for 2017-18, 50% for 2018-19, 25% for 2019-20, and nil from 2020-21 onwards
• The restriction applies on a just and reasonable apportionment where the partnership also carries on non-residential property activities
• "Dwelling-house" includes any garden or grounds enjoyed with it, and "property business" covers both UK and overseas property businesses