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Property News: Stay Ahead of the Game
Landlords, get your tax affairs in order and don’t pay more than necessary
Most landlords will be aware that any profit made from letting
a property is subject to UK income tax, whether the landlord lives in the UK or not, and must be reported in a Self Assessment Return.
The deadline for registering for Self Assessment is 5 October 2014, paper tax returns are due on 31 October 2014, and online returns by 31 January 2015.
HM Revenue and Customs (HMRC) is currently targeting residential landlords by means of its Let Property Campaign in an attempt to recover the £500 million it believes is being underpaid each year in the sector. It has been writing to letting agents demanding details of rents collected on behalf of landlords for the tax year ended 5 April 2013.
So if your tax affairs are not up to date and you owe tax on your letting income, you now have the opportunity to make a voluntary disclosure via HMRC’s Let Property Campaign helpline on 03000 514 479. Landlords who do so will have three months to calculate and pay what they owe, and will receive the best possible terms. If they do not they could face hefty fines or even criminal prosecution.
To avoid paying too much tax, landlords need to be aware that certain deductions are allowable when their property is being let or is available for letting. You should consult a qualified accountant or HMRC for specific advice regarding this, however as a general guideline, landlords are permitted to make certain deductions from their rental income before calculating profit.
Allowable deductions include, but are not limited to, the following expenses: the cost of mortgage interest on loans used to purchase the rented property or to fund improvements; the fees charged by an agent to let and manage your property; accountant’s fees; ground rent and maintenance charges on leasehold property; water and sewerage rates unless charged to tenants; and building and contents insurance and any insurance claim fees.
We would advise landlords to keep a record of the expenditure relating to the rental of their property so that their tax return is easier to complete, and they don’t end up paying more tax than necessary.
For impartial, expert advice on all aspects of renting, letting, buying or selling residential property, please contact Leaders:
North Laine branch, 01273 675571 / firstname.lastname@example.org
Hove branch, 01273 321721 / email@example.com