The ring-fencing rules received Royal Assent on 26 June 2019, and will apply from the start of a person’s 2019/20 income year which is from 1 April 2019 for standard 31 March balance date taxpayers.
Ring-fencing means residential property deductions can only be used to offset income from residential property. You cannot use rental losses to offset other income like salary and wages.
Under the rules, you can only claim deductions up to the amount of income you earn from the property for the year.
You must carry forward deductions over that amount. You can use these deductions to offset your rental income in future income years.
Next week we will go into more detail regarding how it can affect you.