Landlord Tax Advice

Under Self Assessment landlords are legally required to keep and retain records, enabling a tax return to be completed or to make a claim for relief. This legal requirement came into force in April 1997 and a penalty of up to £3000 can be charged for each year of assessment where there has been a failure to maintain or retain adequate records. Belvoir is able to provide landlords with details of income and expenditure and the lender can supply an annual statement of interest. Records regarding rental properties must be retained until the fifth anniversary of 31 January following the year of assessment (ie five years 10 months).

The Self-assessment system was introduced in April 1997. Landlords should take independent financial advice from an accountant regarding this subject, since it can be complex and rules do change periodically. If you wish Belvoir to introduce you to a reputable accountant, please let us know. Some important points to consider include:

  • Landlords are now responsible for assessing their own tax.
  • Income tax is payable on letting income whether the landlord lives in the UK or abroad. Expenses are only allowed if incurred during the letting period, but there are provisions for claiming expenses on an un-let property.
  • For all lettings, the landlord can claim tax relief for maintenance, repairs, insurance, management fees, ground rent, interest on the loan to purchase or improve the property. Mortgage interest can be used to offset against rental income to produce a greater tax saving.
  • Landlords with furnished lettings may claim tax relief for insurance, repair of contents for fair wear and tear – either on a replacement basis or as a concessionary 10% of rental income.
  • A landlord’s income from rented properties – furnished, unfurnished and holiday letting – is now lumped together and assessed under Schedule A.  This pooling is not permitted with overseas properties, which are taxed under Schedule D.

For the record

Under Self Assessment landlords are legally required to keep and retain records, enabling a tax return to be completed or to make a claim for relief.  This legal requirement came into force in April 1997 and a penalty of up to £3000 can be charged for each year of assessment where there has been a failure to maintain or retain adequate records. Belvoir is able to provide landlords with details of income and expenditure and the lender can supply an annual statement of interest.

Records regarding rental properties must be retained until the fifth anniversary of 31 January following the year of assessment (ie five years 10 months).

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