Important Property Tax Changes For Doctors




There have been many changes to the taxation of buy to let properties that have been announced in recent budgets in order to encourage investment in stocks and shares over property. Here we provide an overview for doctors and an explanation for each change that has been announced.


Stamp Duty Land Tax


The 2015 Autumn Statement brought about unfavourable changes regarding stamp duty land tax for doctors. The Chancellor stated that doctors will be liable to an additional 3% charge on stamp duty land tax from April 1st 2016 and will be charged on the portion of the value that falls into each band. The additional charge relates to the entire value of properties purchased by doctors that are not classed as the doctors' main residence.


The standard stamp duty land tax on main residence purchases by doctors is as follows:





Stamp Duty Rates

£0 - £125k


£125,001 - £250k


£250,001 - £925k


£925,001 - £1.5m


£1.5m +



For example, if a second home was purchased by a doctor for £500,000, the pre 1st April 2016 stamp duty liability would amount to £15,000, however the post 1st April 2016 stamp duty would be £30,000 (£15,000 + (£500,000 * 3%)).

Wear and Tear Allowance


Prior to the start of the 2016/17 tax year it was possible for doctors to offset 10% of rental income as wear and tear allowance for maintaining adequate living standards in the property regardless of the actual costs incurred, thus reducing their taxable income by 10%. However since the 6th April 2016 wear and tear allowance is abolished and relief will only be given in respect of actual expenditure for maintaining the property.


If a doctor is to buy an unfurnished property, the expenditure incurred for furnishing the property will not qualify for tax relief, however a doctor buying an existing buy to let property and replacing existing worn out furniture would qualify.


 Capital Gains Tax


The government announced a reduction in capital gains tax in 2016 from 18% to 10% and 28% to 20%, however this reduction does not apply to property that does not qualify for private residence relief. Capital gains on property that is not a main residence will be taxed at the previous rates of 18% (for basic rate tax payers) and 28% (for higher rate tax payers).  The 28% tax rate will also apply to trustees regardless of their marginal rate of income tax.


 Tax Relief on Mortgage Interest


It is currently possible for a doctor to offset qualifying interest payment against rental income to reduce the tax liability incurred from rental profits, resulting in the doctor obtaining tax relief at the top rate of tax paid.


However the summer budget of 2015 announced that there will be a gradual reduction in the rate of mortgage interest relief over four years starting from 2017/18. This will result in the maximum relief that can be obtained being the basic rate of income tax by 2020/21 – higher and additional rate tax paying doctors will no longer be able to obtain relief at their marginal rate. Higher and Additional rate relief will be phased out by 25% per year and will be completely withdrawn by the 2020/21 tax year.

If you are a doctor with buy-to-let properties or are perhaps thinking about buy-to-let as a possible investment then please do get in touch with us for an individual tailored appraisal of the options available to you. Contact Richard Higgs on 0117 966 5699, email him on or he can be contacted through the website on






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