Are 2017/18 Tax Returns An Accident Waiting To Happen For Landlords?

If you check the notes regarding Box 26 then the bottom line is that your accountant has to correctly insert the correct amount of allowable finance costs into Box 26 and the disallowed amount (on which you get the 20% relief) into Box 44. And of course this only for residential lets, commercial/land isn't subject to s.24
Looks like a recipe for lots of Landlords to get their tax substantially wrong.

Having one box for residential finace costs and another for commercial/land finance costs and letting HMRCs computers do the apportionment would have made far more sense, and would result in far fewer errors.

There is no indication on the form of any change from earlier years. Landlords who are ignorant of S 24 and who fill in the return without reading the notes will naturally put all their interest in box 26 “Loan interest and other finance costs”.

They will leave box 44 blank, perhaps after a brief moment of puzzlement as to what “Residential finance costs not included in box 26” might be all about.

Some may even think that MIRAS has been re-introduced and that box 44 is for the interest on their place of residence.

The online version does not have box numbers any more, so the narrative for the equivalent of box 44 is “Residential finance costs not included in 'Loan interest and other financial costs'".

Puzzled landlords who click on the information symbol next to this will get the message: “Enter the remaining 25% of residential property finance costs which you didn’t include in ‘Loan interest and other financial costs’ , this amount will be used to calculate a reduction in your income tax”.

Of course, if they didn’t exclude 25% in the first place they won’t have a figure to enter.

This new tax on a cost is only revealed in the notes or help screens. Is HMRC too ashamed to draw attention to S 24 on the forms?

Now that is funny.

Landlords (and many accountants) who were blissfully unaware of section 24 before, will still be blissfully unaware when they complete their tax returns.

Its almost as if HMRC has hid it away in the small print.

I have to say I have known about the S.24 since the announcement by GO but the self assessment tax form is extremely confusing.

It says you can only claim 75% of the finance costs, this though is not totally accurate, you can only claim 75% of the costs at higher rate of 40% and 25% at lower rate 20%.

The wording could be a lot clearer, why are they even making us do this calculation? Why not just say put in the total finance costs and say in the notes put in all your finance costs and HMRC will calculate as the rules have changed...

So much easier and those that are oblivious will also get captured. They are just making more work for themselves or trying to trip up landlords.

Where a portfolio is held by a 5 person partnership which submits a partnership tax return .... do they complete the partnership page for their respective share of the portfolio or do they complete the property page and tick "jointly held property". Both approaches appear wrong as there would be a fine for not completing the partnership page which mirrors the partnership return information or a fine for putting the income through the partnership page and not showing it as property income.

All sounds rather confusing... I've not yet received a Tax return tho' although my wife has. To explain a bit further; we. Like Mark , have chosen a life in the sun. We are in Spain and became Non-resident last year. My wife's tax return arrived yesterday. It is a 'Tax return for a non-resident company liable to income tax'
She is/we are NOT a company. We have previously completed on-line self assessment returns each year without problems. The notes attached to the return say that a 'non-resident company tax return cannot be filed online' . Should we assume the same applies to us now ? or do I see that it may be possible to use 3rd party software ? and if so has anyone any recommendations ? We sometime wonder if the taxman knows what he is doing - as I said to start with - ' It's all so confusing'.........

Hi,

Just started filling out my Short Tax Return and a bit confused.

Do I enter interest payments in 6.1A and everything else in 6.2 or just put everything in 6.2. The total income is about £25k, interest payments £3k and the rest about £8k.

Grateful for any advice.

Thanks.