UK Landlord’s Tax Return Guide
Dealing with tax is an important part of being a landlord. If you receive rental income from letting a property, you need to tell HMRC and pay tax on your rental profits.
You can claim reliefs and allowances which will reduce your tax bill. You can also carry forward any losses and set them against future profits. We’re here to guide you through the complexity of landlord’s tax, and make sure you only pay what you need to.
Keeping your tax bill down
As a landlord, there are a number of allowable expenses you can deduct if they’re incurred wholly and exclusively for your property rental business. This includes expenses incurred in the day-to-day running of your property rental business like:
- Mortgage interest
- Letting agent fees
- Collecting rent
- 10% wear and tear allowance (up to the 2015/2016 tax year only)
- Professional fees for example accountancy fees
Other expenses you can claim
Before a property is let, you might incur considerable expenses in getting it ready. You can claim a deduction for pre-letting expenses if:
- they were incurred no more than seven years before the start of the property rental business; and
- they would be deductible if they were incurred once the business had started.
Filling in your landlord tax return
Landlords normally have to register with HMRC for Self Assessment and fill in a tax return each year. You need to claim for your expenses using the property income pages of the tax return. You also have to include income from all other sources. If you are living outside the UK and still have rental income you will be classed as a non resident landlord. This means you need to fill in additional tax return pages relating to your residency status. You can find out more with our non resident landlord guide.
How to work out your taxable profit
To work out the profit or loss for your property rental business simply add together all the rent you receive then deduct all your allowable expenses and any capital allowances you’re entitled to that year.
Property income is assessed for each complete tax year (6 April to following 5 April). So it makes sense prepare your property rental business accounts to 5 April each year.
If you make a loss…
You can carry it forward and set it against future profits from the same property rental business. It can’t be used against other income, such as any income you get from employment. Remember to claim the loss on your tax return.
Paying tax on rental income
Tax is due by 31 January after the end of the tax year to which it relates. If you owed tax in the previous year, different dates may apply. If you pay your tax late you’ll be charged interest.
What if I rent more than one house?
All rental income received by the same landlord is grouped together and taxed as income from a single property rental business. This means expenses from one property can be set against income from another, reducing your overall bill. Special rules apply to furnished holiday lettings which are treated as a separate business.
When does a property rental business start?
The business starts when the first property is let. Any subsequent lets you make form part of the existing property rental business.
How we can help you?
We’ve been helping landlords for over 15 years − making sure they’re compliant, and as tax efficient as possible (including any other tax reliefs you may be due). Our qualified accountants make the process simple and hassle free. As we’re qualified tax professionals, you can be confident that your tax affairs will be dealt with professionally.
Our landlord tax return service costs from just £199 + VAT, and includes:
- Dealing with all your income (excluding any self employed income).
- Completing your tax return in full.
- Calculating your tax position.
- A copy of your tax return with a free profit and loss schedule.
- Submitting your tax return online to HMRC.
- Dealing with HMRC on your behalf.
Submit our online contact form below or call us on 01228 520477 to get started.
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