It’s not hyperbole to say that the landlord sector can be turbulent. Legislative changes continue to cause concern for landlords with the Renters Reform Bill working its way through Parliament with Royal Assent expected towards the end of 2024.
2024 will also be the end of Stamp Duty that is lower, with the threshold for tax on residential properties that is set to fall from £250,000 to £125,000 by March 2025, which could negatively affect landlords selling their property.
This is before we get to the daily grind of running a rental property business. If you’re a landlord who is hands-on, your working day can be very hectic. You may be dealing with problematic tenants, collecting rent, managing your portfolio and making sure you adhere to ever-tightening environmental and building rules.
Additionally it is your responsibility to making sure you are in compliance with tax reporting obligations. This includes the reporting of your rental income and costs and expenses to HM Revenue & Customs (HMRC) when you submit your annual self-assessment tax return, if your annual rental income is greater than £1,000. Rent income up to £1,000 is tax free, it is referred to by the term “property allowance.
What is Landlord Self-Assessment?
Self-assessment by landlords is the method that landlords report both their rental income and costs incurred due to operating their business to HMRC in order to establish the tax obligations they have each year.
Process for Landlord Self-Assessment
Register for Self-Assessment with HMRC
As a landlord receiving of rental income, you must be able to submit an annual self-assessment of the landlord to HMRC. To submit this form online, you need to sign up together the Government Gateway account and bring you Unique Taxpayer Reference (UTR) number as well as your National Insurance Number to hand. You can also fill out the form on paper but it will be phased out in the Making Tax Digital rollout. For precision and speed, online filing is the best option for filing tax returns, whether through the HMRC online portal, as well as together an accounting system.
Total Up Your Income
You should keep organized and precise reports of all income tax-deductible like rent you receive from tenants. As well as any other income sources that are tax deductible like capital gains derived from selling property. That includes taxed income at source like earnings from employment. Your self-assessment has to include all income sources. Taxable income is subject to taxation at the appropriate tax rate according to the tax band you’re in.
Deduct Your Allowable Expenses
You are able to take certain allowable expenses off your taxable profits which will reduce your tax liability overall. Allowable expenses are those that are incurred entirely and solely to run your business. Examples of expenses that are allowable and landlords may claim tax relief for include accounting fees, letting agent charges, phone calls bills, stationery, advertising to tenants, transportation expenses and operational costs like repairs and maintenance.
Complete Your Landlord Self-Assessment
Next step, you must correctly and carefully fill out. Verify and file your landlord’s self-assessment tax returns before the filing deadline, whether via the internet or with an actual paper form.
Settle Your Tax Liability
HMRC will issue an invoice for tax that confirms the amount to be paid. The tax bill can be paid with a variety of payment options. Including bank accounts via telephone or online and debit or business credit cards or through your bank or building society.
Landlord Self-Assessment Hints and Tips
Start It Early
It is always advisable to begin your self-assessment of your landlord as early as possible. Therefore, gather all the necessary documents and begin the process as soon as you can. Being late can lead to an over-the-top rush. Which can increase the risk of making mistakes or not meeting the deadlines for filing or payments that could result in you being hit with penalties and fines from HMRC.
Keep an Eye Out for Legislative Changes
Tax law is constantly evolving with frequent changes to rules and laws. As a landlord, you are charged with the obligation to meet your tax obligations. Therefore it is vital to stay on top about any legislation changes which may affect you in order to warrant that you are in compliance and operating as tax-efficiently as you can.
Be Fastidious With Bookkeeping
Being meticulous, proactive and organised in your bookkeeping will be beneficial to the self-assessment of your landlord. Maintaining detailed records of your business’s expenses and income. And avoiding an overflowing pile of paperwork makes it simpler to complete the self-assessment of your landlord efficiently and precisely. A further benefit is that it aids you in staying up-to-date with what is happening to your financials of the company.
Get Professional Support
If you’re having difficulty with the self-assessment of your landlord, aren’t certain about any aspect. Do not have the time to complete the task. It’s a good idea to seek out an professional like us to benefit.
Landlord Self-Assessment with Finex Outsourcing
As the UK’s most trusted accountants, we are here to assist with your landlord self-assessment. Starting from just £100 + VAT, our self-assessment tax return service ensures accuracy, efficiency, and timeliness. Begin the process today by completing our Personal Tax Questionnaire.
And if you’re a Finex Outsourcing client, your annual landlord self-assessment is included in our comprehensive landlord accounting service. Beyond that, we expertly manage all your business and personal accounting needs. With tiered fees tailored to your portfolio size, you’ll benefit from unlimited support and advice from your dedicated accountant
Our landlord accounting service relieves the pressure, providing peace of mind that your accounting and tax requirements are in capable hands. Allowing you to focus entirely on managing your property business and expanding your portfolio. For inquiries about our accounting service or your landlord self-assessment, call us at 0208 133 4599 or request a callback.
