Landlord taxes

Residential and Non-residential landlord schemes

Whether you are a residential or an overseas landlord, the Law requires for you to declare your rental income to HMRC every year. At Kingsley Hamilton Estates we are here to help you make the process as smooth as possible, giving you peace of mind that your requirements are looked-after.

Call 020 7078 0214 or email info@kh-estates.com for more information.

Your tax requirements as a landlord.

 

All landlords need to pay income tax on any profit arising from renting a property they own.

Landlords are required to declare their rental income to HMRC before the deadline following the end of the tax year. The tax year starts on 6th April and ends on 5th April of the following year. However, the deadline for online tax returns is 31st January of the following year.

If it is your first time completing self-assessment, you are required to register by 5th October of the year after you collected any rental income.

Kingsley Hamilton Estates provides a fixed-fee service that ensures landlords’ tax liability in the UK is addressed on time. This includes:
✔ keeping all records of the rent received and expenses deducted for the current financial year;
✔ preparing and submitting tax returns;
✔ liaising with HMRC for any issue.

We act for both UK-resident and non-resident (overseas) landlords.

Residential landlord scheme

UK-resident landlords have the responsibility to ensure that all income earned from letting their property in the UK is declared to HMRC and that they pay the right amount of taxes.

The law requires all estate agents to annually disclose to HMRC information on every property they rent on behalf of UK-resident landlords. Landlords must supply details that include their name and address, the address of the tenanted property and gross annual rent received from the property. This information is required whether the property is managed or not.

 

Non-resident landlord scheme

Non-resident landlords are persons (including individuals, companies and trustees) who have a UK rental income and a ‘usual place of adobe’ (absent from the UK for 6 or more months) outside the UK.

The law requires all estate agents to make annual disclosure to HMRC regarding every property they rent for non-residential landlords. The details they are required to disclose include: name and address of the landlord, certificate of approval number, gross rental income received, expenses deducted, tax deducted (this information must be supplied whether the property is managed or not).

Under the Tax of Land (Non-residents) Regulations 1995, if an agent receives rent on behalf of a non-residential landlord, they must retain tax on the rent and pay this to HMRC. Likewise, if a tenant pays rent directly to a non-resident landlord, they will need to retain tax and pay it to HMRC.

Agents of non-resident landlords are required to deduct basic tax rates from all rental income received or paid (net of allowable deductions) and pay this to HMRC quarterly. Landlords will be issued with an annual certificate (NRL6) confirming the tax payments, and it will then be their responsibility to contact HMRC to ensure that the amounts paid are correct and that all deductible expenses have been taken into account. Estate agents are also obliged to charge landlords for this service.

If their tax affairs are up to date, non-resident landlords can get in touch with HMRC in order to receive their income from rental property gross, without basic tax rates being deducted. If the landlord hasn’t applied for this, estate agents must deduct tax on the received rental income. While other income may not be taxable in the UK, rental income earned from UK properties is subject to taxation. Once HMRC has approved it, they will send the landlord and the agent or tenant a notice of approval confirming there is no need for tax deductions from rent. The landlord or tenant can only take instructions from a notice addressed directly to them and has to withhold tax up to the date stated on the notice.

Non-resident landlord tax is paid quarterly (on 31st October, 31st January, 30th April and 31st July). HMRC will backdate the authority to pay rent without deducting tax to the beginning of the quarter in which the application has been received.

It is important to remember that while acceptance to the non-resident landlord scheme is an approval to receive rental income gross, it does not allow exemption from tax liability and landlords will still need to arrange to have their income assessed and to pay taxes to HMRC. HMRC will normally send self-assessment documentations after granting approval to the non-resident landlord scheme. If landlords have not received this documentation, they are still held responsible for ensuring that taxation is assessed and paid.

What we can do for you

We have rental property clients all across London and throughout England, and we have been working with landlords for many years. We have an extensive understanding of their specific accounting and taxation needs.

What does our service include?

✔ Rental Income Statements preparation;
✔ Help on tax allowable expenses;
✔ Help on using tax losses;
✔ Checklist for tax return information;
✔ Preparation of annual self-assessment tax return for approval and submission by “electronic filling”;
✔ An estimation of tax liabilities in advance.

 

We can also help on the following areas:

✔ Incorporation of your business and issue of a limited company;
✔ Dealing with HMRC enquiries.

 

Why use our service?

✔ Through our service we help ensure our clients are aware of tax savings, helping them save money;
✔ Our experience in dealing with the tax affair of owners of buy-to-let properties means our clients save time and can have peace of mind that all their needs are being looked after;
✔ We help reduce the risk of Inland Revenue enquires;
✔ We help plan our clients’ cashflow;

 

For further information on the taxation for rental properties, including buy-to-let please email us at info@kh-estates.com, and our lettings team will be happy to help.

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