Single property landlords

One flat, one house – we all have to start somewhere, don’t we? Whether you want your tax return dealt with or advice on keeping your tax bill down, our team can help.

Simon, UKLandlordTax

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…

Managing your tax return

It’s obvious, really, but knowing this is going to be done accurately, on time and by someone who knows property tax inside out, instantly makes life easier.

Being on your side

If HMRC comes back with questions about your tax return, we’ll take care of it. We speak their language and we understand what it takes to get to a resolution – fast, without fuss.

Claiming tax breaks

Let’s be honest, the worst thing about tax is always the final bill. But because the UK Landlord Tax team is so engaged in property tax, we’re always able to connect the dots and spot ways to keep your bill down by claiming reliefs and allowances you might not have realised were available.

Getting you off on the right foot

Our landlord starter kit is the ultimate reference for new landlords, covering everything you need to know in terms anybody can understand. Give us a call to find out more.

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

Should I tell the tax man that I let out property?

In short, yes – and it’s really important, too. If you already complete a self-assessment tax return, you’ll need to start including the property income pages. If you have not completed a self-assessment return in the past, you’ve got a statutory duty to disclose this new source of income to HMRC before the 5th October following the end of the tax year ending on 5th April. If you don’t notify or disclose the income on time, you could be face a penalty or, in extreme cases, prosecution.

In any case, common sense should tell you that if you have a source of income that HMRC is not aware of (apart from tax-exempt savings and ISA’s) then not declaring it, if later discovered, may be looked on as evasion.

How will the tax man know if I am renting out property?

This is a great question. HMRC has far-reaching powers and resources, perhaps best illustrated by the following articles published in the national press and highlighting some of the ways HMRC catches out landlords who have not declared their rental income.

The Guardian 29/05/07
The Times 12/07/09

How do I work out how much tax I have to pay, I have rental income of £600 per month and my salary is £25,000 per annum?

Assuming the property is held in solely in your name, any net rental income is taxable on you. If, on the other hand, the property is owned jointly any income arising will be split between you and your partner. Usually this would be a 50:50 split. You’ll then both be taxed individually.

That also assumes the £600 rent received each month is gross, before deduction of allowable expenses. Any expenses of a revenue nature incurred in relation to letting your property could be deductible from gross rents received before arriving at your taxable rental income.

Some examples of deductible expenses are as follows, although this isn’t anywhere near being a complete list:

Mortgage interest and other finance costs (from 6th April 2017, part is being restricted to the basic rate of income tax)
Repairs and maintenance
Service charges
Letting agent’s fees
Electricity/gas/water/council tax where paid on behalf of the tenant
Property and contents insurance

If you incur allowable expenditure which exceeds the rents you receive, you won’t have any income tax to pay. In fact, the letting of your property will give rise to an annual loss which can be carried forward and offset against profits that may arise in future years.

By way of example, say the property is owned in your sole name, your only other income is employment income of £25,000 per annum and your taxable rental profits, after deduction of expenses, are £100 per month – £1,200 per year. You would be a lower-rate taxpayer and tax of approximately 20% will be payable in respect of your rental profits, which in this example would be £240.

With that in mind, you might want to consider setting this amount aside to ensure that you’ve got enough money to pay your tax bill. If your income levels are higher, you may be a higher-rate tax payer and your effective rate of tax could be more than 20%.

Can I claim tax relief on the costs or a property deal that fell through?

This is a good question with a short, straightforward answer: no, you can’t.

Can I let a property to my daughter at a reduced rent?

There’s nothing to stop you letting out a property to someone you’re connected with, or anyone else for that matter, at whatever rent you want to charge. But if you’re renting the property at below market value, you can’t set the losses against other rental profits and can only carry the losses forward to set against rental profits earned from the same tenant.

I have heard that you can split the ownership of a property which is jointly owned and save tax. Is this right?

In certain circumstances, yes. Ownership can vary and before you consider going down this road it would be wise for you to consider the following.

Types of ownership by individuals (England and Wales only)

Sole ownership
This is where a property is owned in one individual’s name and the income and capital gains are chargeable on that individual. Income and gains cannot be shared with a spouse or civil partner for tax purposes.

Joint ownership (joint tenants)
This is where the whole property is owned jointly and if one of the joint owners dies, then the property automatically vests with the remaining owners. The interest in a jointly owned property cannot be left in a will until the last survivor becomes sole owner. Because the individuals are entitled to an equal share in the whole of the income and capital gains, they are shared equally and no election can be made for a different split of income. Therefore, beware. When buying a property in joint names with friends, say, make sure you check with your solicitor that you have common ownership as tenants in common.

Common ownership (tenants in common)
This is where effectively a proportion of the property is owned by an individual. This may be equal or it may be in different proportions. If one of the tenants dies then his/her share goes into their estate and is dealt with by the will or according to the rules of intestacy. If the property is owned in different shares and the owners are not married/civil partners then the income and gains are divided in proportion to the ownership. In the case of married couples/civil partners, the income is treated as shared equally (whatever the beneficial ownership) unless they both make a declaration confirming the actual split of income based on the beneficial ownership of the income and the property. The gain would follow the beneficial ownership.

Given the above, here is how to save capital gains tax
If one spouse owns a property in their own name, it would be an idea to transfer the property into joint names before a sale assuming that the other spouse has not already used their CGT exemption in the tax year concerned. Care does need to be taken as if this is carried out shortly before a sale, then HM Revenue and Customs may attack the transaction as invalid under anti-avoidance rules. You also need to ensure that any income received in the period after transfer of the property is declared on each spouse’s tax return which may increase the income tax paid. There would also be the costs of conveying the property into joint names.

Can I offset my rental losses against other income?

Not, not usually. Generally, losses on a rental income business can only be carried forward to offset against future profits from that rental income business. If the loss arises from surplus capital allowances on commercial lettings, or from certain agricultural expenses, you may be able to claim the losses against your other income.

What expenses can I deduct against my rental income?

This is a really common question for which we’ve provided a separate detailed article – a must read for any landlord, whether they’ve got one property or many.

Allowable expenses against rental income

Can I claim for my time doing DIY renovation and redecoration work?

In short, no. However, the cost of materials is clearly deductible. The cost of travel to the property should also be allowable, provided the only reason for your trip is in respect of the property and its future rental. However, you cannot deduct anything for the time you spend working in the property.

Fees for UK residents

If you’re a single-property landlord based in Great Britain or Northern Ireland, it couldn’t be easier – just let us know whether you’re the sole or joint owner and we’ll take it from there.

Sole owner

If you’re letting a flat or house you used to live in, or inherited, or bought as a investment, we’ll handle your tax return.

from

£145

+VAT

Two owners 

We manage tax returns for those who own property with a spouse or partner, sibling or parent, or just with a friend.

from

£250

+VAT

Fees for non-residents

If you’ve moved abroad, for work or pleasure, and are letting out a flat or house back home in the UK, the same applies – we just need to know if you’re the sole or part owner.

Sole owner

Whether it’s a flat in Manchester or a cottage in the Cotswolds, we’ll make sure it’s reflected on your international tax return.

from

£170

+VAT

Two owners 

If you share ownership with a spouse, family member or business partner, we’ll make a remote tax return easy.

from

£280

+VAT

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Our single-property tax services are for you if you…

Have inherited a flat or house

This is how a lot of people first find themselves with a property other than their main residence. Selling it and taking the cash might seem tempting but there’s also a lot to be said for a long-term source of additional income, especially in these days of historic low-interest rates. Sell or let? Our tax return service is designed to make this decision a no-brainer.

Are moving in with a partner

When you click with somebody and decide you want to live together or get married, if you’ve both got your own places, you find yourself with a spare. This is a great way to get into the letting business. We’ll not only manage your tax return but in this case, can also advise on joint-ownership and tax planning.

Have property as an investment

If you’ve got capital that you feel could be working harder for you, property might be the answer. Acquiring a single buy-to-let flat or house is a great way to test the water and find out if being a landlord is the game for you. We’ll make it easy, offering sound advice and giving the support you need if you decide to turn it into a property empire.

a man in glasses smiling

What a refreshing experience

“We are overseas and have a property in the UK. We had a stressful time finding a suitable firm to look after our affairs... What a refreshing experience to find a company that was so helpful, so considerate, and took time to listen to our concerns. Nothing was too much trouble for them. They have just completed my tax return and although I had issues trying to find my way around portals and so on, they were magnificent in guiding me through what I considered to be a maze."

A Jones, July 2019

Via FreeIndex, edited for clarity

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Contact our landlord tax experts

Jennie, UKLandlordTax

Talk to one of the team today

Call us now on 01902 711 370
or 0800 907 8633