Tax Changes for Landlords
Make sure you’re prepared for the tax changes that are happening from 2016/17.
If you’re going to file your tax return online, you have until 30th December 2016 – if you were planning to do a paper return, you’ve missed the deadline this year which was 31st October 2016!
If you’re a new landlord - are you aware that you’ll need to declare all your income from your buy to let property on your tax return. Here’s our useful guide to help you get started, or a reminder if you’re experienced just so you don’t miss something.
Tax return information
Whether you use an accountant or you complete your tax return by yourself, it’s important to have all the information together before you start. Don’t forget that all your income is considered together – rental income you earn from letting out a property, capital gains you make from selling a property, a salaried job, contract work and any other financial investments – everything is added together and you need to pay tax on the ‘total profit’ that you make.
Buy to let information
These are the main things you’ll need to complete your tax return –
Rental income
Expenses (insurance, utility bills, maintenance etc)
Mortgage interest costs
Capital expenditure (renovation costs etc)
*Extra note* – check your previous year’s return – if you make a loss you can deduct it from the following year’s income.
There are different tax rules for different kinds of properties – make sure you check the rules
Furnished/unfurnished
Overseas properties
Renting rooms in your own home
Furnished holiday lets
There is a lot of information here : https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
If you earn less than £2500 net income from your property, call the Self Assessment hotline on 0300 200 3310 for more information.
Many landlords register under ‘self assessment’ on the website to declare their earnings. You might still need to fill in a tax return even if you make a loss – our advice is to contact HMRC and give details of your own situation over the telephone. They will advise you which route you should take to ensure the appropriate taxes are paid. Look for the UK Property SA105 self assessment form.
Changes in 2016/17
In 2016/17 you’ll only be able to claim for the money that was actually spent on repairing ‘wear and tear’ issues.
Changes in 2018/18
You won’t be able to just deduct mortgage interest from any rental income that you receive. The amount of mortgage interest relief that you will be able to claim will begin to fall, through phasing over 4 years, and it will drop to the basic tax rate of 20% by 2020/21.
Changes in 2019
Capital Gains Tax will be due for payment within 30 days – not held for your next tax bill.
If you need any help and advice, look at the HMRC website or contact an accountant to obtain personal and specific advice.