HM Revenue Tax Property Stamp Duty

A Comprehensive Guide for Landlords looking to complete their Self Assessment Tax Return

Property News

As a landlord, you may not think that you need to complete a self assessment form, yet to many landlords’ surprise, you are required to do so. HMRC treats you in much the same way as a small business owner or somebody that is self-employed, and therefore you need to make sure that you complete this task.

However, particularly for those that have never done one before, completing a self assessment can be a very confusing, difficult task for landlords to do, especially taking into consideration constantly changing tax regulations. With this in mind, we have created a guide to help you to complete your self assessment, understanding everything that is required of you.

The Self Assessment Process for Landlords

Whether you are a landlord, a smaller business owner or operating by yourself, the self assessment process is very much the same. There are three main elements to the self assessment process, including registering, deadlines and completion.

Self Assessment Registration – Before anything else, the very first thing that you should do is to register for your self assessment. This is a simple process, although if you operate through a company, the registration process is slightly different. Once you have registered, you are then free to fill in the self assessment tax return form, of which can be done either online or on a paper version.

Deadlines for Tax Returns – For tax returns completed on the paper version, the deadline is 31st October each year, whilst the online tax return deadline is 31st January each year. Once you have filed the tax return, you are then due to pay the amount of tax that you owe.

Self Assessment Tax Return Completion – When completing your self assessment tax return, you will need all relevant information about the income that you have received throughout the relevant tax year, and also the details of the expenses that are to be deducted. As well as this financial information, you will also need your Unique Taxpayer Reference number.

Landlords Allowed Deductable Expenses

Although things constantly change within the world of tax, there are still a number of different expenses that landlords are able to deduct from their tax bill, including:

  • Costs for property maintenance and repair
  • Insurance costs
  • Property running costs
  • Replacement of certain items
  • Accountancy fees

Which Tax Charges do Landlords face?

For landlords, there are a number of different tax charges that apply. Although regulations and what different people are required to pay are constantly changing, there are some main taxes that landlords should certainly be aware of, including:

Stamp Duty Land Tax – Anybody purchasing a second home or a property for buy-to-let investment purposes is required to pay a charge of at least 3% of the value of the property, with the rate depending on the price of the property.

Capital Gains Tax – Landlords are required to pay Capital Gains Tax when they sell their property, and this is charged against the profit that they make on the sale, when compared to the purchase price.

Income Tax – Any profit that you make through monthly rental income is subject to income tax, and this is dependent on the amount of money that you generate. The basic rate for income over £11,001 is 20%, the higher rate for income over £43,001 is 40% and the additional rate for income over £150,000 is 45%.

National Insurance Contributions – You may be considered to be ‘running a property business’ as a landlord, and this may mean that you are subject to Class 2 National Insurance Tax charges. You may be deemed as ‘running a property business’ if you let more than one property or if being a landlord is your main job.

Author Bio
Gower Accountants are a firm of chartered accountants in Leicester who offer a wide range of services for small and medium sizes businesses including payroll, tax planning, limited company accounts and bookkeeping services.

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