Paying tax is one of the many outgoings which most landlords need to budget for, so taking advice on this topic from a property tax specialist can not only be invaluable, but also save you money.
The first thing to be aware of is you need to declare earnings to HMRC, even if you don’t have to pay tax. Here are some key dates to remember:
· 6th April to 5th April – tax year
· 5th April onwards – you can submit a tax return for this tax year at any time after this date, even before the deadline
· 5th October – the deadline for registering for self-assessment for that tax year, for new landlords
· 31st October, midnight - deadline for submitting a paper tax return
· 31st January, midnight – deadline for submitting online tax return
· 31st January, midnight – deadline for paying all of the tax owed (plus half of the tax if payments on account* are required)
· 31st July, midnight – deadline for paying second payment on account*, if applicable)
*Paying on account
If your tax bill is more than £1,000, you will usually have to start paying your tax on account, which means you pay the tax which is expected to be due in the following year, in advance. It is assumed you will earn the same amount as in the previous year and you are expected to pay half of the tax bill by 31st January and the other half by 31st July.
This hits hardest the first time you go over the threshold, as on this occasion you are required to pay 150% of the tax due (your full tax bill plus half of the following year’s amount). For this reason, it is a good idea to stay on top of your accounts and submit your tax return early to enable you can budget for the upcoming tax bill and avoid any last-minute surprises.
You can submit a return for the year up to 5th April 2018 now, and any tax won’t be due until 31st January 2019.
If you have already paid more than 80% of the tax you owe, through PAYE or via interest deducted from savings, you won’t be required to pay on account.
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