UK Property Tax Advice Is Essential For Landlords

Essential Tax Advice for Property Investors and Landlords

Navigating the complexities of UK rental income tax can be daunting for property investors and landlords. You can save money and ensure compliance with all regulations with guidance and expert advice. This comprehensive guide will help you understand rental income taxes, uncover common pitfalls, and maximise your savings.

Our UK property accountants love specialising in property as they know the inside-out tax laws.

Forming a UK limited company can be an efficient strategy for landlords. By holding property through a limited company, you can benefit from:

– Corporation tax rates on profits are lower than those of higher-income earners.

– Mortgage Interest Relief: Full mortgage interest can be deducted as an expense, unlike the restrictions faced by individual landlords under Section 24 mortgage interest relief cap.

– Dividends: Profits can be taken out as dividends, which may be more efficient depending on your situation.

Contact us today for our professional advice and save tax tomorrow

Section 24 Mortgage Interest Relief Cap

The Section 24 mortgage interest relief cap significantly impacts individual landlords. Under Section 24:

– You can no longer deduct all your mortgage interest from rental income to reduce your HMRC bill.

– Instead, you receive a credit of 20% of your mortgage interest payments.

– Higher and additional rates may cause landlords & property investors to pay more to HMRC due to this change.

We can offer many pieces of advice to landlords, property investors, and developers to ensure that they minimise the money paid to HMRC.

What is Rental Income?

Rental income includes any payment you receive for the use or occupation of property. This can be a house, flat, commercial space, or even land. Payments can come from long-term leases or short-term rentals, like those through Airbnb.

Filing your rental income tax return involves reporting your income and deductions accurately. Here’s a step-by-step guide to ensure you file correctly:

– Collect All Income Information: Gather all records of rent payments, advance payments, and other income sources.

– Document All Expenses: Keep detailed records of all deductible expenses. Receipts, invoices, and bank statements are essential.

Fill Out the Right Forms: Rental income is usually reported on the self-assessment tax return (SA100) and the supplementary property form (SA105) for individuals.

– Submit Your Return: Double-check all your entries for accuracy before submitting your return to HMRC.

Ensure you get professional advice before submitting a self-assessment.

CGT Planning

Capital Gains Tax (CGT) planning is crucial for property investors:

– Principal Private Residence Relief: If the property has been your main home at some point, you may be eligible for relief.

– Annual Exempt Amount: Each individual has an annual CGT exemption, which can help reduce taxable gains.

Selling residential property has a different CGT rate than selling commercial property. You will pay 10% at a basic rate and 20% at a high rate selling non-residential property assets.

You pay 18% at the basic rate and 24% at the high rate for selling residential property.

There are allowable costs to reduce your CGT.

You must also note that you must report your CGT liability when selling residential property within 60 days of disposal to HMRC.

You will also need to notify HMRC if you are a non UK resident and sell residential property under the NRCGT rules.

Getting Professional Advice

Navigating UK laws and regulations can be complex. Seeking professional property tax advice can ensure you maximise your savings and stay compliant. A property advisor can help you understand your HMRC bill, identify eligible deductions, and guide you through the appeal process if necessary.