Readers’ forum: Early redemption penalties on buy to let mortgages

I understand that an early redemption penalty (ERP) is tax deductible in the same way as interest albeit now on a reduced basis since 2017-18 but I am unsure whether these can be offset against rental profits if they are rolled up and passed on to a new mortgage.

My assumption is that this would be the case as the debt is still owing and the ERP would be added to the new loan.

My client would then be paying a small proportion of the interest monthly on the ERP amount in the new mortgage.

My question to readers is therefore whether an ERP is tax deductible when it has been incurred ie added to the new mortgage or whether it has to be paid upfront in cash to claim tax relief on it?

I look forward to receiving replies from anyone who has dealt...