UK Landlord tax has some of the lowest tax rates in Europe. But one of the most complicate systems.
Property tax can be complicated, especially for new landlords. A number of activities happen when you start getting your property ready for rent. It can be easy to forget about tax.
Personal property tax on the profit they make from rent income. There are special rules for calculating profit landlord and rent income tax. Then the profit is added to other income and taxed at the individual’s highest rate.
Gains on disposal of property are taxable. If you have ever live in the property. There may substantial reliefs available.
Let us make sure you don’t miss out on any of the allowable expenses, reliefs, allowances or exemptions.
What we can do for your UK tax?
We offer the quick and easy way through the minefield of UK tax for landlords. If you live in the UK and have any income that is tax or is not tax at the right level. You are oblige to tell HMRC about income. This means you will have to complete a returns tax.
If you are a landlord living in the UK, residency certificate and receive more than £2,500 in rent in a year. You have to complete a tax return. Below £2,500 in rent, you should tell HMRC to collect any tax due through your PAYE coding. You must tell HMRC if you receive over £1,000 rent in a year.
Rents and allowable expenses
Rents less allowable expenses are taxable as part of the taxpayer’s total UK income. The main rule for allowable expenses is that they must wholly and exclusively incurred in the course of the letting business. Though some relaxation of this rule may available in specific circumstances. It is important to differentiate initial and capital costs from running costs. Capital costs and set-up costs, which are capitalist. There are usually relieve for tax purposes against the calculation of the gain on sale of the investment property. The cost of improvements is normally treat as increasing the base cost of the investment.
One of the biggest expenses will often be the mortgage or loan interest. From 5th April 2020 none of the interest is allowable in calculating profit. But 20% of the interest paid is potentially available to deduct from your tax bill. Moreover, what is not use and carry forward to the next year.
The lettings agent will incur other costs and as long as these represent routine maintenance these too will normally be allowable. The replacement of furniture and equipment on a like-for-like basis is fully allowable. No allowance is given for the cost of initial furnishings or equipment. Get in touch today to find out how we can help you with your letting business accounts.
What happens when a property is sold?
If you are disposing of a UK residential property you must report the transaction and pay any property tax UK due within 30 days of transfer (completion). In addition, such a transaction plus disposals of any other type of asset must report with the annual Self-Assessment tax return.
On disposal of the property by a UK resident, any increase in value is potentially subject to Capital Gains Tax. The gain is calculate for comparing the sales proceeds with all the acquisition costs. Some reliefs are available and there is a personal annual exempt amount. Substantial reliefs are available. If the landlord has lived in the property at any time as his only and principal private residence. Get in touch today find out how we can help you with your capital gains tax calculation.
What makes an individual UK resident?
You are probably resident in the UK if you normally live in the UK. The only go abroad for holidays and short business trips. You are always resident if you spend 183 or more days in the UK in the current year, you need to pay residential tax. If you believe you may non-resident then you must pass several precise and very complicated tests – please contact us.
What is the annual tax on enveloped dwellings (ATED)?
If you are a landlord, we offer a very quick and easy way for you to deal with your UK tax obligations. We deal with our clients by email and so there is no need to take time off work to visit the accountant.
If you own your property through a company and it was worth more than £500,000 on 1st April 2017 then you have to make the Annual Tax on Enveloped Dwellings (ATED) returns each April. If the property is not let or is not a development property you may have ATED to pay. We can create and file your ATED returns for a low fixed fee. Don’t get caught out!
We have the expertise and experience to deal with the UK tax affairs of landlords quickly and easily. To find out more about how we can help you click here.