A Landlords Guide on Tax

As a landlord, you’ll have to declare your income and costs - whether you make a profit or not - and keep all records, invoices, receipts and statements for up to six years.

Landlords guide on tax

You’ll find that the taxman is actually quite generous in allowing you to offset a large number of running costs including interest payments on your mortgage and the arrangement fee on the mortgage too.

Where you make a loss on you buy-to-let property, you can carry forward and set it off against rental profits in future tax years (but you can’t set if off against other income).

When you come to sell, there are a number of reliefs that are available that reduce the amount of tax you may have to pay on any capital gain you’ve made on the property, including Letting Relief and Capital Gains Tax Allowance.

Request and complete the Land & Property Supplementary pages for your tax return and the easy to follow notes.

This can be a bit more complex so if you need to know more, you are advised to contact Inland Revenue.

Overseas landlords

The non-resident Landlords (NRL) Scheme is a scheme for taxing the UK rental income of non-resident landlords.

The scheme requires UK letting agents to deduct basic rate tax from the rent they collect for non resident landlords. If non-resident landlords don’t have UK letting agents acting for them, and the rent is more than £100 a week, their tenants must deduct the tax. When working out the amount to tax the letting agent/tenant can take off deductible expenses.

Letting agents and/or tenants don’t have to deduct tax if HM Revenue and Customs (HMRC) tells them not to. HMRC will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied for approval to receive rents with no tax deducted. Bet even though the rent may be paid with no tax deducted, it remains liable to UK tax. So non-resident landlords must include it in any tax return HMRC sends them.

Request and complete the application by non-resident landlords for approval to receive rent with no tax deducted.

If you have any questions regarding tax on rental properties, please feel free to contact us.