From 1st January 2021, all qualifying mortgage loans will no longer receive Tax Relief at Source (TRS). 

TRS is a tax relief borrowers can claim on the interest they pay on a qualifying mortgage loan in a given tax year.

The qualifying mortgage loan must have been taken out between 1 January 2004 and 31 December 2012.

This tax relief can be claimed until the end of 2020.

TRS was originally due to be abolished entirely after 31 December 2017.

In Budget 2018, it was extended to 2020 on a tapered basis for people who were eligible in 2017. It will cease entirely from 1 January 2021.

If you are an affected borrower or want to find out if you are, you should be able to get information about the change on your lenders website.

Most lenders will also write to all their impacted borrowers in December to advise them that their TRS entitlement will be zero from 1 January 2021.

The withdrawal of TRS will mean the borrowers’ normal monthly repayment will be higher.

The letter to the customer will advise the new monthly mortgage repayment amount due from January onwards.

Borrowers who pay by direct debit do not need to take any action because the direct debit will automatically collect the new repayment in January.

Borrowers who pay by standing order should adjust their repayment before the January 2021 repayment date. 

If they do not adjust their payment, this could cause their account to go into arrears and may affect their credit rating which means they may have difficulty getting a loan or other form of credit in the future.

Now might be a good time to switch your mortgage and get a cheaper mortgage rate with another lender.