Landlords: 2014/15 tax return deadline looms but don’t pay more than necessary

Tue 20 Oct 2015

Property specialist Leaders is reminding landlords that a key tax deadline looming, with paper returns due to be completed by 31st October 2015. The deadline for online returns is 31st January 2016.

Jane Wilkinson, Lettings Director at Leaders in Sussex, says: “Most landlords will be aware that any profit made from letting a UK property is subject to UK income tax, whether the landlord lives in the UK or not, and in most cases must be reported in a Self Assessment Return. But it is not uncommon for landlords to pay too much tax because they are missing out on some of the tax allowances they are entitled to.

“With the growing numbers of buy-to-let investors entering the market for the first time, many landlords may not be aware of the deductions they are permitted to make from their rental income before calculating profit. We are therefore pleased to have teamed up with independent accountancy experts Spofforths to advise landlords on how to make the most of the tax allowances available to them.”

Allowable deductions include the cost of:

• interest on loans used to purchase the rented property or to fund improvements

• your agent’s letting and management fees

• repair and maintenance of the property and contents (but not the cost of improvements)

• ground rent and maintenance charges on leasehold property

• water and sewerage rates unless charged to tenants

• a wear and tear allowance (applicable to furnished property only), equal to 10% of the gross rent received (less council tax and water rates) or you can deduct the cost of replacement from the rental income in the relevant tax year

• council tax whilst the property is vacant, or where you pay it on behalf of the tenants

• accountant’s fees

• legal expenses (but not those relating to the purchase or sale of the property)

• building and contents insurance

• VAT on all charges where applicable

Landlords need to be aware that these deductions are only applicable when the property is being let or is available for letting.

Other costs not mentioned above may be allowable if accurate records are kept, but landlords would need to discuss the details with a qualified accountant or HMRC.

For advice you can trust on all aspects of letting, selling, renting or buying property please contact your local Leaders branch. For professional tax and accountancy advice please contact Spofforths.