Landlord also has to pay taxes in the UK
Most landlords in the UK aren't considered to be business people, in the sense that you have to pay taxes or complete the self-assessment.
This particularly applies to people who have, for example, only one property.
Unfortunately, it happens that everyone who has a real estate earnings is legally obliged to complete the annual self-assessment.
If you work and only earn money by renting a property, you probably don't have an account with HRMC, so registration is tiring and nobody likes to pay taxes in the UK.
You earn on real estate – pay and cry
If you want to do everything legally, it is worth to carry out a statement of earnings and expenses, that is a classic accounting. Fortunately, in the UK it's very simple and current computer systems help in this.
It's worth remembering that the tax year in the UK starts on April 6 and ends on April 5.
It doesn't matter whether you run a business or rent a property. The procedure for completing self-assessment is practically the same.
So it's worth knowing what you can and what you can't put into the basket. I recommend talking to an accountant.
So if you rent a property then you should register with HMRC until October 31 in the first year you start to rent and receive income from it.
After registering at HMRC, you will receive a unique UTR (unique taxpayer reference) number as a self-employed person.
Then you can submit a self-assessment in paper form or online. However, I advise against completing the paper form, in the end we have the XXI century
Important dates for paying taxes in the UK
Registration for self-assessment – until October 31 in the first year of receiving income.
Annual self-assessment in paper form – until October 31
Annual online self-assessment – until January 31
Is completing an annual self-assessment difficult?
In order to make a settlement, you must have all your earnings and expenses related to the real estate written down, as well as other, for example, business, part time job.
If you have one property, you can easily do everything in tables in the Excel. In the case of a larger amount, it's worth considering the use of some software supporting settlement for landlords. I recommend reading the article, where I described the best programs for online accounting.
Remember that you must keep all bills for 6 years.
What can be put on your expense account?
There' re a lot of different expenses, but remember that the law likes to change so every year better to check that nothing has changed.
However, there's a group of expenses that has been unchanged for years.
- Some costs associated with the repair of your real estate, but not improvements
- Interest on the loan (every year less and less by 2020)
- Accounting fees
- Building insurance
- Running costs, including for utilities
- Agency fees
- The costs of light and heating
- Council tax
- Fees for services
- Cleaning costs
- Advertising costs
- The comprehensive list can be found on HMRC websites
When don't you need pay tax?
There's a situation when you don't pay tax and it is Rent a Room Scheme, but I'll write about it in another article, when it concerns people who only rent a room in their home.
Relevant information for the fiscal year 2017/2018
Free amount of tax so-called basic allowance will amount to 11,500 pounds
More information about tax in the UK in the case of rental income:
All information comes from gov.uk. To find out the details, I recommend talking to an accountant
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