Wondering if you can claim a tax refund or need to submit a tax return? Use our online tools to find out if you're owed money by HMRC.
Tax Returns for Landlords
I'm renting out a property. How do I declare the income?
When you let out a property, HMRC wants to hear about the money you're making. To declare what you've got coming in, you need to register for Self Assessment Tax Returns. Even if you don't think of yourself as being a self-employed landlord, the taxman will still come sniffing around your rental income. Under the Self Assessment system, you fill in a form (usually online) to tell HMRC what money you've made. However, the taxman's only really interested in your profits. Because of that, you also show him what you've spent on renting the property out. These necessary costs bring down the amount of profit you're paying tax on.
Getting set up for Self Assessment can take a while, so it's best to do it early. You'll have to give some basic information, and hit strict deadlines for submitting returns and paying what you owe. It can be hectic, if you're not used to the system, but keeping good records and getting professional help make all the difference.Self-Employed Tax Calculator
Landlord Tax Returns
How do I pay tax on rental income?
The way you pay tax on your rental income depends on how much you've got coming in. If it's between £2,500 and £9,999 a year after expenses, you'll need to file a Self Assessment tax return. You'll also need to file a return if you're making over £10,000 before expenses.
Even if you're below those limits, the taxman will still want to know about your rental money. If you're below these limits, you probably won't need to register for Self Assessment, meaning you'll be taxed via PAYE instead. You'll need a P810 form from HMRC to declare the money you're making.Self-Employed Tax Calculator
Landlord Tax Returns
How much can I earn in rental income before having to pay tax to HMRC?
Generally, all your income is taxed at your normal rate, regardless of where it comes from. However, there are ways to bring down the amount of tax you owe. The government's Rent a Room scheme is a good example. Under this scheme, landlords letting out a furnished room in their own home can earn up to £7,500 per year tax -free. You don't need to do anything to claim this tax relief, other than opt into the scheme. However, you'll still need to file a Self Assessment return to pay tax on anything you make over the £7,500 threshold.Self-Employed Tax Calculator
Tax Returns For Landlords
What expenses can I claim as a landlord?
As a landlord, you've got certain "allowable expenses" that count against the rental income you're taxed on. The basic rule is that they have to be the "wholly and exclusively" necessary costs of letting out your property.
We're talking about things like:
- Repair or replacement expenses.
- Water charges.
- Council tax payments.
- Agent fees or commissions.
- Wear and tear of any furnishings you provide.
- Insurance and accountancy fees.
- General running costs and mortgage arrangement fees.
If you splash out for additional services from your own pocket, like cleaning or light and heating costs these can also count as allowable expenses. Keep in mind that only the necessary costs can count as expenses. Non-essential improvements to the property, for example, won't count. Again, though, the rules change often and not every item is claimed for the same way.
Always talk to RIFT about what you can count as expenses to avoid missing out or getting tripped up.Self-Employed Tax Calculator
Tax Returns for landlords
I'm only letting out a room in my house. Do I still have to use self assessment?
Yes. There are specific rules about letting out rooms, but the bottom line is that the taxman will still want his bite of your profits. Even if you're just using a “sharing economy” platform like Airbnb, the money you're making is taxable. In fact, the government is doing all it can to crack down on people earning undeclared rental income this way.
Renting out a room in your home does come with some additional options, though, such as the Rent a Room scheme. Under this system, you're allowed to earn up to £7,500 a year before paying any tax on your rent money. You don't actually even have to own the property to use Rent a Room. As long as your lease allows you to let out the room, you're good to go. It's for furnished rooms only, but it can be a great way to keep your tax down.Self-Employed Tax Calculator
What rental income records should I keep?
If you're renting property out, you'll need an accurate record of exactly when it happened and what you received from it. If you charge your tenants for repairs or other services, that income needs to be tracked as well. Rent books, receipts and invoices are all vital documents here. Crucially, you need to keep anything that shows the money you're spending on letting out the property. There are specific rules about this, but keeping on top of the paperwork can save a lot of tax.Self-Employed Tax Calculator
Landlord Tax Returns
Can I get help with self assessment tax returns?
Absolutely you can! RIFT specialist property rental tax team has the expertise to handle all your tax problems and questions. The rules around property rental are a constantly-shifting labyrinth of thresholds, regulations and exemptions. RIFT will guide you safely through, and keep the taxman honest while we do it. If we're already handling your tax refunds for you, we'll even take care of your Self Assessment at the same time with no extra fee!Self-Employed Tax Calculator
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