Filing A Tax Return As A Landlord

If you are a new landlord, you might be unsure how to file your tax return. Taxes can be tricky to navigate, but ensuring you file your taxes correctly from the start will save you trouble later down the line. 

Filing your taxes as a landlord is much the same as filing them as a self-employed person or a freelancer.

If you earn between £1,000 and £2,500 from renting, you should contact HMRC regarding tax. If you earn more than £1,000 in income from renting, you should complete a self-assessment tax return in order to pay taxes. 

You need to register for self-assessment before the 5th of October of your second tax year as a landlord by creating an account with HMRC. You can register online or by filling out and posting a paper form. 

After this, you will receive your UTR number (unique taxpayer reference), which you will need to keep safe as it is necessary for sending your tax returns. Now you’re ready to fill in your tax return and send it off.

You should register by the 5th of October and submit your self-assessment tax return no later than the 31st of October if you are submitting a paper tax return. If you are choosing to complete your return online, you will have until the 31st of January of the following year to submit. 

The deadline for payment for both forms of submission is the 31st of January and failure to pay by this date can result in penalties. 

Ensuring your tax return is filled out correctly is important, as any mistakes made could result in you paying the incorrect amount of tax or having to restart the entire process. 

If you feel you might have trouble doing this, you can employ an accountant who will be able to fill the forms out for you. As long as you give your tax return accountant all the relevant and necessary information, they should be able to do this with no hassle. 

Accountants will also be able to talk you through what expenses you are able to claim back from your tax. Claiming expenses can reduce the amount of tax you pay, such as maintenance costs, accountancy costs, running costs, insurance, council tax and cleaning and gardening services.

However, you cannot claim certain things as expenses such as renovations or unnecessary repairs. 

You will need to keep hold of all relevant paperwork for at least five years as HMRC may request to see these documents to check that your tax returns are correct and up to date. This includes things like invoices, bank statements and rent payments from tenants. 

While paying taxes may seem complicated, once the initial set-up is done it will be far easier as you will have had a run-through and know what you are doing.

Employing an accountant definitely makes things easier, especially if you are renting multiple properties, as they will be able to keep track of your finances and file taxes for you, making sure you don’t miss deadlines and avoiding any penalties.