Self-assessment advice for landlords

Jan 4, 2021

Well, here we are – it’s 2021, the self-assessment personal tax return deadline of 31 January is only a few weeks away and we’re so busy our heads are spinning.

We’re pretty good at supporting the UK residential landlords we work with in getting their tax returns done early. Even so, it’s inevitable that they pile up towards the end of the year, which means all hands to the pumps at UK Landlord Tax HQ.

With that in mind, I’m going to be honest with you: if you’re a landlord thinking of getting in touch right now, mid-January, wanting your 2019/20 tax return done, we’ll probably struggle to fit you in.

We’d love to have your business next year, though, so do get in touch.

We’ve also got some detailed guidance on the self-assessment process here on the website, including case studies and examples of tax calculations.

In the meantime, here’s some advice to make the process of handling your own online tax return less painful.

1. Don’t panic, make a plan

The deadline might be looming but the important thing is to take a deep breath, make a plan and set aside some time.

Even a relatively simple tax return requires clarity and headspace – you don’t want to rush it or be distracted.

You’ll also want to give yourself time to absorb the guidance and make follow-up queries, so pencil in a slot at the very least a week before the deadline.

It’s worth saying, too, that an online return is your only option at this point – the deadline for completing a return on paper was the end of October 2020.

2. Check you’re registered for self-assessment

If this is the first time you’ve had to submit a return to account for rental income, it’s possible you missed another important deadline: you should have registered before 5 October 2020.

Again, don’t panic if not: you probably won’t get penalised for failing to register.

The problem is, registration takes time to process, especially when HMRC is at its busiest as it will be right now, so your unique taxpayer reference (UTR) can take a couple of weeks to come through.

That could mean you’ll end up filing your tax return late and get an immediate £100 fine, despite your best intentions.

So, if you haven’t registered, stop reading this and do it now!

But if you don’t get registered in time, there’s a backup system which allows you to submit your payment using your National Insurance number as a personal identifier.

3. Work out your earnings

You need to get your paperwork together – bank statement and records of rent payments – so you can calculate your total untaxed earnings in the 2019/20 tax year.

Hopefully, you’ve been keeping records as you went along, ideally electronically, so this shouldn’t be too difficult.

Failing that, you’ll need to get your bank statements together and go through highlighting any lines of additional income.

It’s increasingly common for banks to provide only electronic statements and those don’t always go back as far as required. If you need to order copies, do that as soon as possible to give the bank time to process them.

4. Calculate business expenses

You need to collect receipts for business-related expenses so you can deduct them from your profits.

That might include things like:

  • maintenance and repair costs
  • cleaning and gardening fees
  • letting agency charges
  • landlord insurance
  • mortgage payments interest.

The rules on allowable business expenses can be complex, however, and if you’re doing your own return, it’s probably safer to be conservative in what you claim even if it means paying a little more tax this time round.

5. Complete and submit the online form

The self-assessment portal is a mature, well-established system these days – not the unreliable nightmare it was 15 or so years ago.

Still, it can be a bit intimidating, especially for first timers.

The main thing is to take your time and, if in doubt, click the help buttons throughout to get more detailed information.

Also remember you won’t be the first person to have hit a brick wall with some of the more complicated questions and HMRC’s own forums have lots of helpful advice.

And, no, you’re not imagining it – there are lots of questions to which the answer is probably “No”. For example, it’s increasingly unlikely you or your spouse were born before 6 April 1935 for the purposes of claiming the married couple’s allowance.

6. Pay the bill

Once your bill has been calculated, pay it as promptly as you can.

For most people, the deadline for payment will be 31 January 2021.

This year has been challenging for everybody and we know several clients who have been forced to use the money they’d set aside to pay their tax bill to cover essential expenses.

If that sounds like you, or you simply forgot to put any money aside, don’t worry too much.

Though HMRC hasn’t extended the tax deadlines, as many hoped it might, it has extended eligibility for Time to Pay installment plans for self-employed people. Taxpayers with up to £30,000 of self-assessment liabilities can spread payments over 12 months, completing payment in full by January 2022.

It’s also more likely than usual to be sympathetic to general requests for payment plans via the Time to Pay helpline.

There will be interest to pay, at 2.6% from 1 February 2021, but that’s preferable to hefty fines.

Next year: less stress, less tax

Getting a qualified specialist landlord accountant to handle your tax return is always preferable to muddling through on your own.

The advice above doesn’t touch on the range of additional reliefs and allowances to which you might be entitled. They’re different for every client depending on circumstances which is why getting to know you is part of our onboarding process.

Get this right and you can potentially find substantial reductions in your tax bill – usually sufficient to cover our fee.

It’s also the case that, because we complete hundreds of tax returns every single year, we know the portal, the forms and the processes inside out and back to front. That makes the whole thing go more smoothly, with time for follow-up queries even close to the deadline.

If you want an accountant to help with self-assessment in January 2022, get in touch now.

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Got a question for our landlord tax experts?

If there’s a property tax issue that has you puzzled or worried, get in touch. Everyone on our team loves to talk, especially when it helps people like you find peace of mind.