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  • Tax

    Tips for landlord self-assessment tax returns



    You are joining us for the continuation of our "Get into the property groove for 2017"  themed month, where we're sharing lots of valuable content to get your new landlord year off to a flying start!

    Today's article is by our tax partner, Rental Income Tax Advisors, or RITA for short.

    RITA writes:

    Here we go again!  As we enter 2017, focus turns to the upcoming on-line filing deadline for your self-assessment tax return. 

    Whether you are a BTL newbie with one property or an established investor, you must declare your rental income to HMRC, even if you do not think you have made a profit.

    Of course, whilst there are many landlords who will have completed this some time ago, there is always a considerable number leaving things to the last minute.  Quite a sizeable percentage of our clients too are January filers!

    Whilst there is little time remaining, it is still of utmost importance to ensure your tax return is fully accurate, and of course crucial to ensure you include all expenses you are allowed to claim.

    There are penalties for both late filing of your return, and late payment of your tax owed, so it really does pay to meet the deadline in a timely manner.

    A vast number of expenses may be claimable, and if you are in any doubt, professional assistance from a property tax advisor is advisable. 

    Typical examples of costs for your 2015/16 tax return may include, but not limited to, ground rent, service charges, council tax and rates, utility bills, insurances, repairs, accountant’s fees, letting agent charges, certain course fees, membership of a landlord organisation like the RLA, travel costs, telephone and stationery costs, finance costs and interest, and wear and tear allowance for fully furnished properties. 

    You can also check out RITA's  Landlords' A - Z of property tax expenses - Video Guides

    The latter two are worth picking up for further information; the 2015/16 tax return is the last year you may claim for wear and tear allowance. 

    From April 2016 onwards, wear and tear allowance was abolished, which will affect your next tax return, i.e. the 2016/17 tax return onwards.  Instead, all landlords may claim for the replacement of movable furnishings - assuming it is like-for-like or the nearest modern equivalent – accounting too for disposal costs and any amounts received in the process of disposal and replacement.


    Whilst a lot of talk lately is regarding Section 24, it should be emphasised that although the new rules begin to phase in in 3 months’ time, this forms part of the 2017/18 tax year, and therefore the first tax return affected will be the one with tax payable by the filing deadline of 31st January 2019.   Nevertheless, planning for these changes is still extremely important in readiness if you are affected.

    So if you still have not filed your tax return, act fast – only 22 days to go!

    If you need assistance with completing your self-assessment tax return, RITA may be able to assist you.  Visit their website for further information and contact details.

    If you have got value from this content, please share it on social media using hashtag #GITPG2017.

    The campaign/content so far:

    Day 1   #GITPG2017 - 5 things to kickstart your year

    Day 2   What landlords should focus on in 2017

    Day 3   Property positives for landlords in 2017

    Day 4    Low risk way to get started in BTL

    Day 5    Ways to assess tenant demand

    Day 6    Get into the networking groove in 2017

    Tomorrow :   A look at some new technology that will assist developers and property investors to market their properties.

    What other things will you be doing this month to get back into the property groove and prepare for the new year?

    PREVIOUSLY -      Become a more active landlord in 2017

    UP NEXT -             12 Section 24 questions landlords need to ask

    DON'T MISS -        Buying a property in limited company structure ...

    NOW WATCH:     


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    Groovy that ages us LOL

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    Learn Change and Adapt ?????

    I've got a question about filing a self assessment tax return online.  (We use an accountant ourselves and I did ask him about this a while ago but have forgotten the answer!)

    My daughter is buying one of our rental properties.  She is employed and as this will be her first and only venture, it doesn't seem worth using an accountant - she'd like to file the self-assessment online herself.

    I 'think' I recall my accountant saying that she would ONLY need to submit the property pages - is that right?

    Also, she will probably sell the property in a year or two to buy a home for herself when she's ready and then expects to have no further self-employed or investment activity, so can she then say to the taxman 'I don't need to submit for self-assessment any more'?  I have heard rumours that once HMRC latch onto you, they expect you to submit forever more whether you need to or not, which would be a nuisance for her!

    Thanks,

    Angela

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    "It is the small decisions you and I make every day which shape our destinies." Anthony Robbins

    AIUI She should also fill in the employment pages and those pages for any other income she receives (bank interest etc).

    If she reaches the point where she feels she no longer warrants the attention of the SA form, she can write to HMRC outlining why "I only have PAYE income below £x and have divested my land & property interests."  The decision to remove her from the SA regime is HMRC's though, not hers.

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    Thanks Pipllman, you're a font of knowledge:-)

    Angela

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    "It is the small decisions you and I make every day which shape our destinies." Anthony Robbins

    I most probably have to replace the driveway of my only rented property this year and my question is - is this classed as maintenance and therefore tax deductible?

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    If you are putting like for like down its a repair if you upgrade it you can only claim a proportion of the repair

    Take pics and then you have a record of what you have done 

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    Learn Change and Adapt ?????

    Thanks dislexic_landlord.


    The current drive is tarmac and is disintegrating with weeds growing everywhere!


    I wanted to replace that with block paving - but to claim the full amount back as repair, would I need to go for Tarmac again?

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    I would get a price for Tarmac first

    Then get a price for Block Paving

    Compare the two if the block paving is higher in price claim what you would have spent on Tarmac

    If the block paving is higher keep the info to one side and when you sell the property you can claim the Capital Improvement

    hope that helps

    To claim repairs it has to be like for like not an improvement

    But any thing you do to improve a property can be claimed back when you sell the property

    there called initial Expenses

    and Capital Expenses


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    Learn Change and Adapt ?????

    Interesting!

    HM Revenue & Customs has spent years and £100m or more on a super-computer designed to identify those who may have paid too little tax. And now – with the deadline for filing 2015-16 tax returns just weeks away – the system is being fully deployed for the first time.

    Instead of relying solely on information provided by taxpayers via their returns, HMRC’s powerful “Connect” system now draws on information from myriad government and corporate sources to create a profile of each taxpayer’s total income. Where this varies from the information provided by the taxpayer, the account is flagged and could be subject to further investigation.

    For the first time, HMRC is also using these powers to warn individuals to check that they have not underpaid.

    Last month it sent letters to 10,000 individuals who had submitted their 2014-15 tax return without a complete declaration of savings interest received.

    HMRC said it had used information gathered from banks, peer-to-peer lenders such as Zopa and other financial institutions and then checked it against individuals’ tax returns. It sent letters to those with discrepancies.

    A spokesman said: “We have written to customers who appear to have under-declared untaxed interest.”

    The Connect system’s data-hoarding does not stop at the income people have received from work and investment.

    “Connect broadly deals with information spontaneously available in government departments or as part of the digital footprint that people leave when they use the internet,” said George Bull, senior tax partner at RSM, the auditing and consulting firm.

    “We all leave a massive electronic footprint of where we are, when we are away, what we do and what we spend.”

    The Connect system crunches data from Airbnb, the rental platform, for instance, or eBay.

    Full/source story

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    I have met Landlords over the years who have the attitude its money on the side and I make so little profit so I don't tell the Tax Man

    I must say personally I have met anyone yet who has been found guilty of not doing a Tax Return


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    Learn Change and Adapt ?????