Do you know your tax obligations as a landlord?

Due to the reduction in mortgage interest relief, we are experiencing an increase in the number of landlords required to complete a Self-Assessment Tax Return.

When renting out a property you pay tax on any profit you make. Your profit is the amount of money left once all expenses have been paid. The amount of tax you will need to pay depends on:

  • The amount of profit you make
  • Personal circumstances

If your property income is under £1,000, you may not need to inform HMRC. If it's higher, you will need to declare your income.

If HMRC ask you to send in a tax return you must give details of your rental income and expenses for the tax year even if you’ve got no tax to pay.

If you haven’t previously informed HMRC of your property rental, you will need to by 5th October following the tax year you first received rental income.

Rates of tax
The rate of tax you may need to pay will be based on your total income for the year, which will include any income from employment, self-employment, savings, investments or pensions.
Let property campaign
The Let Property Campaign is an opportunity for landlords who owe tax through letting out residential property, in the UK or abroad, to get up to date with their tax affairs in a simple way and take advantage of the best possible terms.
If you’re a landlord with undisclosed income, you must tell HMRC about your unpaid tax now. You’ll then have 90 days to work out how much you owe and pay it across to HMRC.
The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes. This includes:

  • single rentals
  • multiple properties
  • specialist landlords with student or workforce rentals
  • holiday lettings
  • renting out a room in your main home for more than the Rent a Room Scheme threshold
  • those who live abroad, or intent to live abroad, for more than 6 months, and rent out a property in the UK
  • Properties now sold, where previous rental income hadn't been declared.

This campaign is not open to those landlords who are letting out non-residential properties such as:

  • shops
  • garages
  • lock ups

You also cannot use the Let Property Campaign if you want to disclose income on behalf of a company or a trust.

You can use the Let Property Campaign to check if you need to disclose unpaid taxes under this campaign.
If you jointly own a property there is other guidance you should read such as the information under ‘jointly owned property: husband and wife or civil partners’ in the HMRC property income manual.

Be warned:
If you use a letting agent, we have seem circumstances where HMRC are contacting agents directly for landlord information, which they may be obliged to provide.

Tax on rental income can be complicated, this guide aims to give a basic overview.

Please do not hesitate to contact us with any queries you may have regarding this post.


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