Landlord Tax Returns

Some people become landlords because they have a portfolio of properties and earn a full-time income from it. Others may be accidental landlords, or inherit a property. Others are landlords by mistake or by moving into a house with their partner.

Landlords pay tax! You need to be prepared for this daunting task.

What a Self Assessment tax return covers

What is a Self Assessment Tax Return?

This type of tax return allows HMRC to gather income taxes, NI and any other amount that hasn’t been already taxed.

Self-employed people, business partners, or those who have other sources of income, like dividends, rental income, are all included. You’ll have to file a Self Assessment form if you are a landlord who receives untaxed rental income.

Do you need to file one as a landlord?

If I am the owner of the rental property, do I have to submit a Tax Return?

Yes. If:

• The rental income is over £1,000 per annum or
• You also have income from other sources (like self-employment or investments) and rental income.

What is the tax I will have to pay as an owner?

It depends on how you make your rental income and what circumstances apply to you. Your rental income will be included as part of your total income, and is taxed according to the current income tax rate.

Cutting your tax bill with allowable expenses

Remember that, just like self-employed businesses, landlords pay taxes on their profits, and not the amount they earn from the rental property. So, make sure to lower your tax bill by deducting all allowable expenses such as maintenance, repairs, or management fees.

We’ve already mentioned that you should keep detailed records to ensure your Self Assessment return is accurate. Accountants can also help you maximise your allowances so that you don’t overpay. For Accountants Bath, visit https://www.chippendaleandclark.com/accountants-near-me/bath

How can I lower my Self Assessment tax?

You can include certain expenses that you incurred “wholly” and “exclusively” for the purpose of renting out your property. This can reduce your tax bill. These allowable expenses can include the following:

• Property maintenance and repairs
• Professional Fees (including legal and accounting fees)
• Agent fees
• Insurance premiums
• Costs of service (such as gardening, cleaning and other services)
• Ground rent and service charges
• Water Rates
• Charges for gas and electricity
• Tax on Council

You may be eligible to claim capital allowances if you rent out furnished accommodation to guests and own it.

Summary

Explains landlord tax obligations in the UK, covering when a Self Assessment tax return is required, for example if rental income exceeds £1,000 a year, how rental income is taxed as part of total income, and how allowable expenses such as maintenance, professional fees, insurance and ground rent can be deducted to reduce a landlord’s overall tax bill.

Questions this article raises

• What counts as an allowable expense for a landlord’s tax return?
• What happens if a landlord misses the Self Assessment deadline?
• How does rental income tax differ for accidental versus portfolio landlords?