Registering for self assessment – help needed for a newbie landlord

by Readers Question

9:48 AM, 2nd October 2014
About 4 years ago

Registering for self assessment – help needed for a newbie landlord

Make Text Bigger
Registering for self assessment – help needed for a newbie landlord

Would appreciate any help the forum could give me on the following …

After searching google and searching your forums I am still none the wiser will regards to self assessment. Registering for self assessment - help needed for a newbie landlord

My wife and I bought our first rental property in January this year and first rented it out in March, we always knew we would need to register for income tax from our rental income but now the time has come are unsure how to.

The HMRC self assessment website does not seem to specifically mention registering as a landlord, so what catergory do we/ I register under?

Also do we both have to register as the property is jointly owned? In which case do we have to split all income and expenditure 50/50

Your help would be greatly appreciated.

Many thanks

Damian



Comments

Mark Alexander

9:53 AM, 2nd October 2014
About 4 years ago

Hi Damian

Your rental profits will be taxed as investment income. HMRC specifically target landlords who self assess because they know how complex the tax for us can be. Many landlords are caught out by HMRC despite having thought they've done everything by the book. Many other landlords pay more tax than they should due to being unaware of what can and can't be claimed. I recommend you to employ an accountant, preferably one who is a landlord and looks after several other landlords. Also check to ensure they are either chartered or certified and fully insured for the advice they provide.
.

Joe Bloggs

16:08 PM, 2nd October 2014
About 4 years ago

i think all you need do is tell them that you are a landlord, eg by phoning the self assessment helpline. they will then send you log in details and you just fill in the relevant pages of the tax return online. accountants fees may well be disproportionate to the income on one BTL.

matchmade

17:57 PM, 2nd October 2014
About 4 years ago

Reply to the comment left by "Joe Bloggs" at "02/10/2014 - 16:08":

They will send the UK Property supplementary pages, or do your SA return online like most people: you just need to tick "Yes" in section 4 of the supplementary pages section and the relevant Property pages will appear automatically, ready for you to fill in.

As regards the details of the return, it is pretty easy to do yourself and there is plenty of free advice available online regarding claimable deductions and how to handle capital improvements: basically, like-for-like replacements, e.g. of bathrooms or a roof repair or replacement, can be deducted from current income if you wish, but improvements like adding an ensuite fall under capital deductions, which are only claimable when you sell and become liable for capital gains tax (so hang on to your invoices to prove your expenditure).

An accountant's advice may also help first time round, as Mark suggests. You will both need to register for SA as the property is jointly owned, but there are various ways of reducing your tax bill as a married couple.

Mike W

18:14 PM, 2nd October 2014
About 4 years ago

Hi Damian,

As both of you own the property then yes both of you need to inform HMRC that you are in receipt of rental income. As you started last tax year you need to do the return for 2013-14. HMRC will send you the necessary forms to cover everything ... welcome to self assessment!!

Do you know how to prepare your accounts? If not take Mark's advice. You may have made a loss last tax year and will need to carry forward that loss into the 2014-15 tax year.

HMRC frequently target new landlords just to make sure their accounts are correct ...

Recardo Knights

10:47 AM, 3rd October 2014
About 4 years ago

Hi Damian,
If you find it hard to do the self assessment look for a good accountant, do you know anyone in business who would recommend one to you?
Do your own spread sheet on the pc or a piece of paper show all income (rent) and outgoings (mortgage payments, bills etc).
Take your mortgage statement and bank statements to confirm the fact to an accountant and ask how much it would cost to do your return.

My accountant charges about £200 per property but because my spread sheet show rent, mortgage payments, and expenses per month on each property, it probably takes him an hour or two to do the return.

I could do this myself as I'm sure I've done all the work for him, but it is peace of mind. Tax man will not be knocking on my door, and his fee is also tax deductible.

If in joint names the profit is split 50-50 so your wife will also have to declare her share of the profits on her tax account even if she is working and paying PAYE.

A good accountant will also claim for things that you are entitled too but probable do not realise.

Mark Alexander

10:53 AM, 3rd October 2014
About 4 years ago

Reply to the comment left by "Recardo Knights" at "03/10/2014 - 10:47":

Hi Recardo

£200 per property is VERY expensive, my accountant charges me half that figure, i.e. £100 per annum per property - see >>> http://www.property118.com/member/?id=452
.

David Mensah

9:37 AM, 4th October 2014
About 4 years ago

Hi Damian,

Another issue to consider -- if one of you is or would become a higher rate tax payer, while the other won't, then it may be worth splitting your rental income along a different fraction than 50/50. This can be done with an HMRC form 17.

Neil Robb

13:55 PM, 4th October 2014
About 4 years ago

Hi All

I hope my accountant does not see this in the last two years he has charged me only just over £850.00 approx..

I have received two major tax rebates by employing him in the last two years. I worked out with the refund the money I got will pay his fees for the next 20 to 30 years.

He does not charge me by the property and keeps me right. It can be a false economy. By not employing the correct accountant.

The tax return is quite simple when it comes to filling out. Make sure you register now as it takes a while to receive your details so you can complete it on line.

As you just received one months rent in your return 05/04/2013 to 04/042014.
By the time your put down your legal cost of buying the house. they will probably be no tax to pay. Cost such as council tax, insurance,repair and mortgage interest part of mortgage, Letting agents fees are all allowable as tax deductible.

If you furnish the property there is a 10% allowance to replace items through fair wear and tear. Cost for travelling to your property can also be claimed.

Carrying forward a loss is where it gets complicated for me.

I prefer just to pay the accountant now. At least that way I know it is correct

Jason Holden

13:57 PM, 4th October 2014
About 4 years ago

Hi Damian

Here is a couple of links to help you get going:
https://www.gov.uk/renting-out-a-property/paying-tax
https://www.gov.uk/let-property-campaign

You mention property income split, have a look at this article:
http://www.property-tax-portal.co.uk/taxarticle95.shtml

You will need to register with HMRC for Self Assessment:
https://www.gov.uk/register-for-self-assessment

You should however consider paying for proper professional advice, it could save you a lot of money and worry in the long run.

Good luck,

Jason

PS Mark - £100 per property is very cheap, personally I like to give our clients a full service with ongoing advice and planning and that can not be done for £100 per property ... cheap sometimes is just that, cheap! 🙂

Damien B

16:01 PM, 4th October 2014
About 4 years ago

Everyone, all the comments have been really helpful from all of you so many thanks.

One last question.. Do we register as sole traders, partnerships or as one of the other options?

thanks

1 2 3

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

44% of landlords fear Right to Rent

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More