While an income from property letting is always welcome, there are some tax implications that you need to be aware of. Here’s a quick guide to your tax liability as a landlord.
If you are a landlord who lives in the UK, any profit you make from renting your property will be subject to Income Tax. When we collect the rent on your behalf, we don’t deduct any tax from the rent we pay you, so you will need to inform the Inland Revenue of this income yourself.
There are a number of expenses that can be offset against rental income and we would therefore recommend that you contact an accountant to find out more.
If you are treated as a non-resident landlord for UK tax purposes, you will still have to pay UK income tax on any profits you receive from renting your property. In these circumstances, we are obliged by law to deduct basic rate tax from any rent we collect and send it to the Inland Revenue on a quarterly basis.
To qualify for an Exemption Certificate, the Inland Revenue usually require that:
If your property is in joint names we will need one certificate for each of the joint owners and we will need to receive the Exemption Certificate(s) before we can pay your rental income gross.
The Inland Revenue views landlords in the same way as businesses, which means that any costs associated with running and maintaining the property that you incur may be offset against the rental income. This can substantially reduce or even eliminate your tax liability.
Typical costs and expenses include:
Make sure you keep all receipts and invoices.
If you make a loss on the rental property, you can carry this loss forward to offset against profits from the property in future years.
For more information on tax please go to www.hmrc.gov.uk