Cheers luciaadr

"If you are looking to overpay on one mortgage (out of your BTL, and residential borrowings), its often better to overpay the resi one. Keeping the BTL borrowings high reduces your tax bill. Need to do the sums based on the respective interest rates and tax rates though."

cleared it in my head.

On a BTL, yes

Can you still get interest only mortgages that easily?

As said, interest on the mortgage is tax deductible.

If you are looking to overpay on one mortgage (out of your BTL, and residential borrowings), its often better to overpay the resi one. Keeping the BTL borrowings high reduces your tax bill. Need to do the sums based on the respective interest rates and tax rates though.

You can also claim 45p per mile for trips to/from the BTL property, and DIY stores etc (as long as you were only going for BTL things)

Be careful re mortgage arrangement fees, these are capital, so cannot be used to offset your income tax liability, but can be used to reduce capital gains tax on eventual sale. That said, most people stick them through their tax return anyway, but imo they're asking for trouble.

However, you can minimise the tax you have to pay by deducting certain "allowable expenses" from your taxable rental income. Allowable expenses include:
•Interest on buy-to-let mortgage payments (it's only the interest, not any capital you repay that's tax deductable)
•Maintenance costs (repairs and upkeep, but not property improvements such as building an extension)
•Letting agency fees
•Buildings and contents insurance premiums
•Council Tax (where it is you, and not the tenant, who pays it)
•Utility bills (again, where it is you who pays the bill!)

Interest is afaik but then I leave it in the hands of the accountant.

According to the below, interest is deductible

http://moneyfacts.co.uk/guides/buy-to-let/tax-on-buy-to-let-property-and-income290312/

I thought mortgage payments (and interest) were not tax deductible?

So rental income minus service charge, spending on the property such as repairs etc would reduce liability, but interest could not be used

You'll also have your tax code amended assuming you only currently have one income. Any repayments made (above the interest payments) are non-deductible against tax and bear in mind if you plan on selling it down the line, you're likely to stump 40% in Capital Gains unless you can prove that it is your primary residence.

Ensure you keep every receipt for everything that you spend on the place no matter how trivial - no point losing the tax code and not recouping it elsewhere.

I would consider keeping receipts for your new place for any work that is done - obviously you shouldn't put these in against the flat's expenses though.....

It's simple really . You pay tax on the income from the rental property less the interest rate and less other costs . Paying off your other place has nothing to do with it .

Im currently in the process of pushing paperwork around for the purchase of my new house and letting out my existing flat.

Can anyone advise me a place to read up on the tax benefits of interest only on the buy to let and paying off the main property?