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Landlord Tax

If you have any questions about Landlord Tax, we’ll tell you all you need to know.

Below are a few common questions Landlords ask often.

  • Will I have to pay tax on my letting income?

Not necessarily; it all depends on your personal financial circumstances. For example, if the property being let is mortgaged and the mortgage, together with the related costs of property upkeep, exceed the rent you receive, then it is possible that no tax will be payable.

  • Letting my property

Income tax is payable on rent received from a property that is let. Your tax position will determine whether you pay tax or not. All profit you make from letting should be added to your other taxable income for the year, although the financial records for letting must still be kept separately.You have to pay income tax if the total of your taxable income is greater than your tax allowance.

  • Expenses can be offset against the rent received

 Only those expenses incurred “wholly and exclusively” for the purpose of the let can be offset against your letting income. These might include mortgage interest, general repairs and maintenance, insurance and, of course, your agent’s property management fees.

  • The records you will need to keep?

 You need to keep a record of all income and expenditure incurred in relation to all lettings. The records should show to whom payments have been made and from whom income has been received.

  • Who is responsible for my tax?

You are. You are obliged to submit all the relevant information to the HMRC annually to account for all your letting income.

  • Is this the same if I am a landlord living abroad?

As your letting agents, we are obliged to deduct tax from all rental income, unless the HMRC provides us with an approval number from The Non-Resident Landlords (NRL) Scheme. If the property is owned by more than one person, then an approval number will be required for each party, otherwise a proportion of tax will be retained. For more information, visit www.hmrc.gov.uk/cnr/nr_landlords.htm

 

Still got questions?  Contact Us directly.



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