Hi, I’m Simon.
I’m one of the Directors of UK Landlord Tax and, as it happens, a landlord myself. I still remember the thrill of acquiring my first rental property. Back then, I had a lot of questions and there were times when it felt like more of a challenge than an opportunity. But mighty oaks from little acorns grow, as they say. If you’re just starting out on the landlord journey, get in touch and let our team give you a helping hand.
Our mission is to help you enjoy being a landlord
We take the stress out of property tax by…
Tax returns: managing them
Having someone who knows property tax inside out to handle this accurately, on time, and within a budget makes life much easier.
Should HMRC require more information about your tax return, we will handle it for you. Getting to a resolution is our priority, so we speak their language and understand what it takes to reach a quick, uncomplicated conclusion.
Tax breaks claimed
The final bill is always the worst part of tax. Since the UK Landlord Tax team is so involved with property tax, we’re always on the lookout for ways to keep your bill down by claiming reliefs and allowances you might not have known existed.
Setting you up for success
For new landlords, our landlord starter kit offers an all-in-one guide that covers everything you need to know. Find out more by calling today.
Download our FREE UK Property Tax Guide.
A simple guide to property rental income tax and property capital gains tax for UK Landlords.
Current tax rules
Dealing with HMRC
How our tax system works outside of PAYE
Frequently asked questions
I let out property. Do I need to inform the tax man?
Yes – and it’s crucial as well. You’ll need to include the property income pages in your self-assessment tax return if you already file one. The deadline for reporting this new source of income to HMRC is 5 October following the end of the tax year ending 5 April if you have never filed a self-assessment return before. It is possible to face a penalty or, in extreme cases, prosecution if you fail to notify or disclose your income on time.
It stands to reason that if HMRC is unaware of your income (apart from tax-exempt savings and ISA’s), not declaring that income could be considered evasion if later discovered.
Can the tax man tell if I rent out my property?
Yes, as HMRC has a wide range of powers and resources at its disposal. Here is an example of HMRC catching out landlords who have not declared rental income from an article published in the national press: The Guardian 29/05/07
My rental income is £600 per month and my salary is £25,000 per year. How do I calculate my tax bill?
Any net rental income earned by the property is taxed to you solely if it is held solely in your name.
Any income arising from the property will be split equally between you and your partner if you jointly own it. In most cases, the split would be 50:50. Each of you will be taxed separately in this case.
Furthermore, it is assumed that £600 is the gross rent each month before deductions for expenses. In order to determine your taxable rental income, any expenses related to renting your property could be deducted from gross rents received.
The following are a few examples of deductible expenses, though they are certainly not exhaustive:
Interest on mortgages and other finance costs (limited to the basic income tax rate for most residential properties)
Upkeep and repairs
Charges for services
Fees charged by letting agents
Several utilities were paid on the tenant’s behalf: electric, gas, water, and council tax
Insurance for property and contents
In this case, you will not have to pay taxes on the income you receive if your allowable expenses exceed the rent you receive. You can carry forward and offset your annual loss from the letting of your property against future profits.
Imagine you own the property in your sole name, that you earn £25,000 per year from employment, and that your taxable rental profits, after expenses, are £100 per month – £1,200 a year. Your rental profits, which in this example would be £240, would be subject to tax at the lower rate of approximately 20%.
In light of this, you may want to consider setting aside this amount to cover your tax bill. Your effective tax rate may exceed 20% if your income levels are higher.
If a property deal falls through, can I claim tax relief?
The simple answer to this is no, you can’t.
Would it be possible to rent a property to my child at a reduced rate?
A property can be rented to anyone, whether related to you or not, for whatever rent you wish. When renting the property for less than market value, you cannot set the losses against other rental profits; they can only be carried forward and set against the same tenant’s rental profits.
Can the ownership of a joint property can be split to save taxes?
The answer is yes in certain circumstances. There are various types of ownership, and before deciding to pursue this path, it is advisable to consider the following.
Individual ownership types in England and Wales
Property owned by one individual is chargeable to that individual for income and capital gains. For tax purposes, income and gains cannot be shared.
In this situation, the whole property is owned jointly, and if one owner passes away, the remaining owners inherit the property. When a property is jointly owned, the last survivor becomes sole owner before it can be left in a will. Income and capital gains are shared equally because everyone is entitled to an equal share, and no election can be made for a different split of income. So beware. Be sure to check with your solicitor that you have common ownership when buying a property in joint names.
An individual owns a portion of the property. It may be equal or in different proportions. When a tenant dies, their share goes into their estate, where it is dealt with by the will or intestacy laws. When the property is owned by individuals without being married or civil partners, income and gains are divided proportionally. Married couples/civil partners are treated as having equal income (whatever the beneficial ownership) unless they both sign a declaration confirming their actual income split as determined by the beneficial ownership of the income and property.
Here are some ways to save capital gains tax based on the above
The transfer of a property into joint names before a sale would be advisable if one spouse owns the property in their own name and the other spouse has not yet used their CGT exemption. The transaction needs to be carefully timed, since HM Revenue and Customs may challenge the transaction if it occurs shortly before the sale. It is also important to ensure that each spouse’s tax return includes income received after transfer of the property, which may result in an increase in tax payments. Additionally, the property would have to be conveyed into joint names.
Is it possible to offset my rental losses against other income?
Generally, no. Rental income losses can usually only be carried forward for offset against future profits. The loss may be deductible against other income if it is caused by surplus capital allowances on commercial lettings or certain agricultural expenses.
Is it possible to deduct rental expenses from my income?
There is a special article we’ve written about this question – a must-read for any landlord, regardless of how many properties they own: Allowable expenses against rental income
If I do my own renovations and redecorating, can I claim my time?
No, in a nutshell. Material costs, however, are clearly deductible. Your travel expenses to the property should also be allowable, provided that they are solely related to renting out the property. The time spent working on the property, however, cannot be deducted.
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Our single-property tax services are for you if you…
You have inherited a house or flat
Often, people first acquire a property other than their main residence in this manner. Although it might seem tempting to sell it and take the cash, there are benefits to having a long-term source of additional income, especially now that interest rates are historically low. Should I sell or let my property? With our tax return service, you won’t have to second guess your decision to become a landlord.
You and your partner are moving in together
If you both own your own homes, if you decide to live together or get married, you have a spare house to let. This is an excellent way to get started in the letting business. In this case, we are able to advise on joint ownership and tax planning in addition to managing your tax return.
Invest in property
Investing in property might be the answer if you want your capital to work harder for you. If you’re thinking about becoming a landlord, buying a buy-to-let apartment or house is a great way to test the waters. Whether you decide to turn this opportunity into a property empire or not, we’ll assist you every step of the way.
Generous with their time and detailed in their advice
''I am a UK based landlord who sought advice from UK Landlord Tax relating to the structuring of my limited company and the set up of a Family Investment Company (FIC) which Manjinder offered invaluable advice on. UK Landlord Tax have been super responsive, generous with their time and detailed in their advice. An extremely rare experience in today's fast paced business world. Majinder could give me chapter and verse on the implication of my children's US citizenship relating to the FIC which was an extra bonus. As far as value for money goes I couldn't have asked for more. Thank you''
SANDRO G - JUNE 2023