UK Landlord Forum / Life

Hi,
I am in the process of switching an existing mortgage with TMW to a new deal. Some deals are free of arrangement fees and are generally around 3.00% but they are offering a 1% deal for one year with a 2% fee. Both deals work out at around the same amount of overall cost but I'm wondering because interest payments are capped at a 20% tax allowance is the arrangement fee regarded as interest or an expense tax wise?

Hope that makes sense.

Many thanks

It's treated as a cost of finance i.e. allowable at 20% in the same way as interest. Otherwise you'd be seeing a lot of BTL mortgages with very low rates but spectacularly large arrangement fees..

https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords