Tax Advice
Tax Advice
Renting out a property is an income and therefore can be liable for tax. You will only pay tax on the 'profit' you make from your property and this will be added to your other tax liabilities such as wages and you will have to fill out a self assessment tax form each year. But don't worry too much, we have put together a brief guide below, and any of our staff will be able to guide you in the right direction.
Income Tax
Income tax is payable on rental income irrespective of where you live. Landlords must declare this income on a Self-Assessment Tax Return and if one is not issued automatically he or she has a legal responsibility to notify the Inland Revenue of any liability. As the Inland Revenue assesses your income individually, properties that are jointly owned require returns to be completed by each legal owner. There is a requirement under Self-Assessment to keep adequate records to ensure that the calculations included in the return are accurate.
Deductible Expenses through careful planning we can help to reduce your liability. Examples of deductible expenses that could be used to reduce taxable profit derived from property income include the following: -
- insurance, ground rent, repairs & maintenance
- Letting agents fees
- 'wear & tear' allowance for furnished properties
- Mortgage or loan interest
- legal and accountancy charges
- Unused 'personal allowances' (applied by IR)
Non-Resident Landlords
If you live outside the UK for more than 6 months Bay Rentals has a legal obligation as the rent receiving agent to deduct basic rate tax on the net income and make payments to the Inland Revenue quarterly. However, you can apply to the Inland Revenue to "self-assess" your own tax. Please ask us for a form which we can pass to the Inland Revenue on your behalf, which upon approval from the Revenue will authorise us to pay the rent without deducting tax at source.
The 'self-assess' method will save you tax, because you can add tax deductible expenses, as above, that we might not know about, such as mortgage interest payments.
Our Services
We can provide you with basic tax advice and will provide you with a statement for the moneys that we deal with, monthly for rental collection services and an annual statement to assist with completing your self assessment tax forms.
Further Advice
More detailed information can be obtained from any chartered accountant or visit www.inlandrevenue.gov.uk
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