As a landlord, you are required to pay tax on your income from your rental property. KeyRing lettings have composed a brief guide to explain how income tax is applied to rental income (however, we are not accountants. This offers a starters guide not financial advice!).
What is rental income?
The rental income is mainly the rent you receive from the tenant, however, here are examples of other sources that are considered to be income that you might not have considered;
- Money retained from a deposit
- Money for utility payments
What deductions can you make?
You can make deductions for reasonable expenses incurred during the tenancy such as (but not restricted to);
- Repairs as a result of tenant damage
- water rates, council tax, gas and electricity landlord insurance costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
- letting agents’ fees
- accountant’s fees rents
- ground rents and service charges
- direct costs such as phone calls, stationery and advertising for new tenants
The deductions can only be made in full if they are a direct cost associated with letting the property.
A landlord can also claim for ‘replacement of domestic items relief’ to cover the cost of items that might need to be replaced at the end of the tenancy due to wear and tear. It does not cover items bought in the first instance, and only like for like replacements can be claimed.
When does tax need to be paid?
You must pay tax on the profits you make each year, this runs from 6th April to 5th April the following year.
Do you have to separate income and expenditure for multiple properties?
No, all income and expenditure for the properties (in the UK) can be collated.
KeyRing Lettings can provide our fully managed landlords with a printed tax return detailing the rental received and the expenditure for the year.
For conclusive information on tax liability please visit: