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At Peer Accountants, we are dedicated to empowering landlords with comprehensive tax solutions tailored to the unique challenges of property investment in the UK. Our expert team excels in navigating the intricate tax landscape landlords face, ensuring your property portfolio is managed with optimal tax efficiency.
Our specialised landlord tax service is designed to ensure compliance with the latest UK tax regulations and maximise your investment returns. Understanding that each property investor’s situation is distinct, we offer bespoke advice that aligns with your financial goals and property strategies.
Key aspects of our service include:
At Peer Accountants, we believe in a proactive approach to tax planning. We help you achieve a more profitable and tax-efficient property investment journey by staying to date with regulatory changes and leveraging tax-saving opportunities.
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If you receive rental income, you must file a tax return. The income you earn from renting out property is subject to Income Tax, and you must report it on a Self-assessment tax return if it exceeds the threshold for property allowance or rent-a-room scheme.
You need to pay tax on income from property if you made a profit in a tax year. In other words, when your rental income is more than your rental expenses. Regardless of whether you made a profit or loss, you still need to declare income from the property in a tax return if it exceeds the threshold for property allowance or rent-a-room scheme.
If you are a UK resident, you generally need to declare income from overseas property to HMRC. The taxable amount is calculated similarly to UK-based property income after deducting allowable expenses. You may also be eligible for the property allowance to reduce your taxable income. Furthermore, if you’ve paid tax on this income in another country, you may qualify for relief on your UK tax bill, potentially reducing the tax you owe in the UK.
If you are running a property business, you will need to pay class 2 National Insurance if your profits are equal to or more than your personal allowance in a year and all of the following apply:
You can generally claim the following expenses as a landlord:
The tax rules differ depending on whether your rental property is residential, a furnished holiday letting, or commercial. Therefore, you need to be careful when claiming property-related expenses, as claiming expenses to which you are not entitled or are not allowable for the type of property can result in fines and penalties.
In the UK, rental income from property jointly owned by spouses or civil partners is split evenly for tax purposes, meaning each is taxed on 50% of the income. This default treatment applies to both beneficial joint tenants, who own equal shares of the property, and tenants in common, who may own unequal shares but are often taxed equally unless they specify otherwise. However, if the property is owned as tenants in common and the couple wishes the income to be taxed on a basis that reflects their actual ownership proportions, they can do so by submitting a Form 17 declaration to HMRC along with evidence of their ownership shares.
The Form 17 declaration allows couples owning property as tenants in common to have their rental income taxed according to their declared shares, deviating from the default 50:50 split. This is particularly relevant for those seeking to allocate income in a way that might be tax-efficient based on their individual tax situations. It’s crucial that any declaration accurately reflects the actual ownership structure to avoid complications with HMRC.
If you made a loss on your rental income in the UK, you can obtain relief by carrying forward the loss to offset against future profits from the same rental business, effectively reducing your future tax liabilities.
Additionally, suppose you own multiple rental properties; some are profitable while others are not. In that case, you can offset the losses from one property against the profits of others within the same tax year, lowering your overall taxable rental income.
However, it’s important to remember that losses from rental activities can only be offset against profits from the same type of rental business, and rules can vary, particularly between residential rentals and furnished holiday lettings.
Yes, in the UK, when you sell a property, you may need to pay Capital Gains Tax (CGT) on the profit you make, which is the difference between what you paid for the property and the selling price. However, you don’t have to pay CGT if the property is your primary home and qualifies for Private Residence Relief. CGT is likely due if the property is an investment or a second home. Some allowances and deductions can reduce the amount of CGT you owe.
If you rent out a room in your house in the UK, you might not have to pay tax on the income if it’s below £7,500 per year, thanks to the Rent a Room Scheme. If you earn more than this threshold, you will need to pay tax on the excess amount.
When you buy a property in the UK, you typically need to pay Stamp Duty Land Tax (SDLT) if the purchase price is above a certain threshold. The rate of SDLT varies depending on the cost of the property, whether it’s your first home, and whether it’s a residential or commercial property. First- time buyers may benefit from reduced rates or exemptions. In Scotland, you pay Land and Buildings Transaction Tax (LBTT) instead, and in Wales, Land Transaction Tax (LTT) applies.
