UK Property RENTAL TAX
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If you are a Landlord and receive rental income in the UK then you will need to complete a self assessment tax return each year to declare your income.
Whether you are a first time landlord or a seasoned investor the actual landlord tax return process is the same and so we can help you no matter how big or small your property empire may be. At UK Tax Returns we will prepare your accounts and liaise with HMRC on your behalf so that your tax affairs are always kept up to date.
Members of our team are currently property Landlords themselves and receive rental income. Due to this we are well placed to understand your specific tax concerns. Contact us today so that we can help you with your Buy to Let property portfolio – we offer free no obligation advice.
We will guide you through the process and let you know about all the legally allowable tax deductible expenses which will help to reduce any tax liability that you may otherwise have. There is often confusion as to at what stage certain expenses are allowable and so we can explain this to you clearly and concisely so that you are confident with your landlord tax return.
Throughout 2015 the ex-chancellor George Osborne announced many changes to the tax system specifically for landlords who have buy to let properties in the UK. These property changes in the Budget statement has caused a lot of confusion amongst landlords so please do contact us to discuss any concerns that you may have with regards to the changing system and we can ensure that you are fully compliant with your landlord tax responsibilities.
There has been a major shake up to the Buy to Let property sector recently with the newly announced changes affecting many private landlords – it has been estimated by HMRC that 20% of all UK landlords will be affected.
The main change is that upper rate tax payers in the UK (those paying some tax at 40% and above) will no longer be able to claim all of their mortgage interest as a legitimate business cost. In the past both lower rate and upper rate tax payers could claim full tax relief on their mortgage costs – so either 20%, 40% or 45% depending upon which tax bracket you are in. In the future all landlords will have their tax relief capped at only 20% so these changes will greatly affect landlords who pay tax at 40% or 45% of their income. The changes will be phased in from April 2017 onwards and will take full effect from April 2020 onwards.
A further big announcement in the 2015 Autumn budget was that from April 2016 the amount of stamp duty paid for any property that will not be your main residence – so a Buy to Let property, holiday let or second home, will increase by 3%. At the moment stamp duty on property increased in tiered stages depending upon the value of the property and from April 2016 all stamp duty brackets will increase by a further 3% for all second homes and investments. The good news is that at present under current tax laws you can claim tax relief on the stamp duty you have paid. When you come to sell the property in the future this will help reduce your Capital Gains Tax liability.
What major changes have been made to landlords tax recently?
What happens if I make a loss in my rental business?
From time to time businesses and individuals do make a loss and if this happens you will not be liable to pay any tax to HMRC for your rental income. It can often still be in your best interest to maximise the loss as much as possible by ensuring that you claim all of your allowable expenses so that the loss can be carried forward into the next tax year and used to reduce your tax liability, and your tax bill, in the new tax year.
PROPERTY RENTAL FAQ's
What is a personal allowance?
HMRC allows every person to earn a certain amount of money each year which is tax free before any tax is due. For the 2015/16 tax year this is £10,600 per person and in 2016/17 this has increased to £11,000.
In addition to this, if you have made any Capital Gains where you have sold an asset for a profit then the first £11,100 of this is tax free.
If I own property in a joint name with someone do we both need to complete a tax return?
Yes you will. If you own any property, sell any asset or work within a partnership with any other person then you will each need to complete a self-assessment tax return as HMRC needs to know about everyone’s individual personal circumstances.
Are you ready for the tax changes?
*second persons’ tax return is offered at a reduced rate provided there is no other individual income other than one PAYE job. Additional income or more complex tax affairs may be charged at a slightly higher price. Please call us today for a fixed quote.
As authorised partners of HMRC tax agents are specialist companies who are very familiar with the UK tax system – we understand what you can and can’t claim for a range of specific situations and our aim is to save you a lot of time and money.
At UK Tax Returns we have special agent dedicated phone lines direct to HMRC tax office which are not available to the general public. We are able to talk to HMRC about your claim very quickly at any point that we need to and we can access specialist guidance from technically advisers within HMRC.
Using a tax agent removes the general stress and hassle of trying to deal with a process that you may not 100% understand or be familiar with. Often dealing with the tax office directly can be daunting and confusing so we will act as an intermediary and explain everything to you jargon free.
Why use a tax agent?
When do I pay for your services?
In most cases you will be invoiced for our services after we have collected all of your income and expense figures for you, we have carried out the basic book keeping that you will need and we have fully prepared your UK tax return ready to send this to HMRC. At this stage we inform you of your tax liability and how much tax you owe, or how much you are due back. We will send you a copy of your prepared tax return for you to check and approve.
Unless you a due a tax refund from HMRC then we will send you our invoice at this stage and then once our invoice is paid we will submit your tax return securely online through the government’s portals.
Our service provides basic book keeping when preparing your property tax return. We will collate your monthly rental statements and offer to liaise directly with your letting agent, if you have one. We offer a simple and clear fixed fee service of £225 per tax return, and if you own the property in joint names then the second persons’ tax return will be reduced to £112*.
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