By Jo White
Tax Consultant, Spofforths
Along with everything that needs to be done as a landlord, you must make sure your tax position is up to date.
31st October is the deadline for completing your tax return if you file it by paper. The deadline for online filing is 31st January.
New landlords must register in the self-assessment system by 5th October following the end of the tax year you need to send in a tax return for. Penalties can be charged for late registration.
The potential penalty is based on a percentage of potential tax lost if you had not registered. Penalties start at 100 per cent of this amount but can be reduced where the reason for non-registration is considered non-deliberate or not concealed. It will also depend on whether the registration is prompted or unprompted.
Once registered, you have to complete a tax return each year. If the tax return is issued after a certain date the deadline is different. These are set out below:
|Tax Return Issued||Paper||Online|
|1 August - 31 October after the end of the last tax year||3 months after issue date||31 January|
|After 31 October after the end of the last tax year||3 months after issue date||3 months after issue date|
Not everyone has to file a tax return
If your rental income (and other untaxed income) is less than £2,500 (net of expenses) you may not be required to register for self-assessment. You will still be required to disclose to HM Revenue & Customs the income you have generated but a return will not need to be submitted.
Rather than making payments in January and July through the self-assessment system, tax can be collected through your PAYE coding notice. If you are an employee or receiving an occupational pension, if the amount due is below £3,000 and the return is filed by 31 October you may be eligible.
Penalties for late returns
Penalties will be issued for late filing of a return and a fixed penalty of £100 will be automatically raised if you miss the deadline. A daily £10 penalty can apply once you are 3 months late. After that, tax geared penalties are raised. Finally, up to 200 per cent of the liability or £300 if higher will be applied if you are more than 6 months late.
Whilst the self-assessment system can be a little daunting, it is important that you understand what your reporting requirements are. Getting professional advice, even if only initially could potentially save you time and costs in the future.
Spofforths Tax Consultancy Team
Tel: 01403 253 282
Spofforths is a leading independent firm of Chartered Accountants. Its expert team of 18 partners and directors are supported by more than 180 staff members to provide an exemplary level of service to clients throughout the country.