Landlord Archives - CruseBurke

News,May 2018

Self Assessment For Landlords: What Landlords Need to Know

Chris20/10/2025Landlord , self-employed accountant

When you have rental income in the UK, completing a self-assessment is one of the major steps in remaining compliant with HMRC regulations. When you rent one apartment or multiple properties, it is always beneficial to understand how self-assessment works for landlords. This guide explains everything landlords need to know about property self-assessment tax. Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help about Self Assessment For Landlords. What Is Self Assessment for Landlords? HMRC has a system that is known as self-assessment that collects the income tax from individuals and businesses whose tax is not automatically deducted. To the landlords, it implies that all rental income and allowable expenses should be declared every year. You must file a Self Assessment tax return only if your gross rental income is over £10,000 or your rental profit is over £2,500. If your gross income is between £1,000 and £2,500, you need to contact HMRC to see how to declare it. This applies whether you are: Leasing residential premises. Renting of commercial property. Managing a furnished holiday let (FHL). Subletting a house as a tenant (in certain instances) MTD for Self Assessment: What Landlords Need to Know? MTD self-assessment is going to be a massive revolution in the near future. With MTD for self-assessment, landlords will have to keep digital records and send income updates every three months using software that works with the HMRC systems. Making Tax Digital (MTD) will require landlords with total income from property and self-employment above certain thresholds (£50,000 from April 2026, £30,000 from April 2027, £20,000 from April 2028) to keep digital records and provide quarterly updates using compatible software. What’s Changing? Instead of sending in one tax return each year, you’ll send digital updates every three months. You’ll need to use software that works with MTD (like QuickBooks, Xero, or FreeAgent). At the end of the year, you’ll send a final statement instead of the usual self-assessment return. Why Should You Care? MTD is meant to cut down mistakes, make it easier to keep track of your income records, and give you a better idea of where you stand with your taxes all year long. If you’re a landlord, now’s a good time to start using digital accounting tools to get ready for this change. Who Needs to Complete a Property Self Assessment? Whether you need to file a full Self Assessment tax return depends on how much you earn: Property Allowance (£1,000): If your total gross income from property is £1,000 or less in a tax year, you do not need to contact HMRC or declare the income. Income between £1,000 and £2,500: If your gross property income is over £1,000 but not more than £2,500, you should contact HMRC. They will tell you if you need to do a Self Assessment tax return or if they can collect the tax through your tax code. Income over £2,500: If your gross property income exceeds £2,500, you must register for Self Assessment and file a tax return. How to Register for Self-Assessment as a Landlord If you have not previously submitted a self-assessment, you must register with HMRC by 5 October following the end of the tax year in which you received your first rental income. Steps to Register: Open a Government Gateway account on the HMRC site. Apply to register as an individual taxpayer (except a company). You will be sent a Unique Taxpayer Reference (UTR) number. Use your UTR to submit your initial self-assessment property income return. Once registered, you are expected to send your tax return by: 31 October (where filing a paper return), or 31 January (if filing online). How to Complete a Landlord Self Assessment Return? Report Your Real Estate Revenue All rent received during the tax year (6 April to 5 April) must be reported. Include service charges, tenant payments for repairs, or forfeited holding deposits. A refundable security deposit is not income unless you retain it; then only the retained amount is income. Deduct Allowable Expenses Claim operating and maintenance costs, including: Letting agent fees Repairs and maintenance (not improvements) Property insurance Council tax and utilities you pay Replacement of Domestic Items Relief for replacing household goods, furniture, and appliances. Accountant fees are only allowable for preparing rental accounts, not for property purchase/sale. Report Mortgage Interest Individual landlords receive a 20% basic rate tax credit on mortgage interest and other finance costs, not a deduction from rental income. Add Other Income If you have other income sources, you must add them to your return for a combined tax calculation. Submit and Pay Submit your return online and pay any tax owed by 31 January. Be aware of Payments on Account if your tax bill is over £1,000, requiring two advance payments for the following year. Deadlines for Landlord Self Assessment Heads up! HMRC has clear deadlines for self-assessment returns and payments: What To Do When To Do It Register for self-assessment October 5 (after the tax year ends) Submit your paper tax return October 31 Submit your online tax return January 31 Pay your tax January 31 (after the tax year ends) 2nd payment on account (if needed) July 31 Late submissions cost you fines and interest. Get your return in early to avoid them. Common Mistakes Landlords Make in Self-Assessment Landlords often make mistakes in their property tax returns. Here’s what to watch out for: Hiding income: Every bit counts, even small rental payments. Claiming wrong expenses: Keep personal stuff and upgrades separate. Old mortgage tricks: Some still use outdated deduction methods. Joint ownership mix-ups: Only declare your share of the pie. Filing late: A late filing will cost you £100 initially. Ignoring digital tax rules: MTD self-assessment should be adopted. Allowable and Non-Allowable Expenses for Landlords Allowable Expenses Non-Allowable Expenses Property repairs (e.g., fixing leaks, like-for-like window replacement, patching walls) Property improvements or renovations that add value (e.g., extensions, loft conversions) Letting agent fees, advertising for new tenants, and management fees Personal expenses, such as travel unrelated …

Can I Claim Back VAT on New Builds?

Chris10/10/2025Landlord , VAT

The construction of a new home is fascinating to most people in the UK. You are fantasising about your ideal home, yet expenses are quickly rising. Value-added Tax, or VAT, is one such large cost. The question is, is it possible to claim VAT on new buildings? The answer to this is neither a simple ‘yes’ nor a simple ‘no’. This guide will explain the VAT charged on new buildings in a simple manner. We will discuss when you are allowed to get money back, how, and what the rules are. In the event that you are planning a self-build project, this assists you in saving money on VAT. Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help about VAT on a new build property. When Can I Reclaim the VAT on a New Build Property? You can recover VAT on a new build property provided that you satisfy important conditions. First, you have to build a new house on your own. This is a house or a flat, where you and your family live . You are also able to reclaim VAT, in case you purchase a bare shell of a developer and complete it yourself. Holiday homes are also included, provided they are used by relatives. The crucial condition is that the dwelling must not be intended for business purposes. Obtain planning permission first. You must have permission or an outline with details granted. In certain cases, permitted development rights work well. The property has to be independent; the rules of planning cannot make it dependent on another structure that you cannot sell independently. You are not going to sell or rent it out immediately; you are going to live there. You may not be eligible in case business use is found, such as operating a shop at home. Family members are spouses, children, parents, and siblings. Acquaintances or remote kinsmen do not count. Check the deadline. For buildings completed on or after 5 December 2023, you must submit your claim within 6 months of the project’s completion. For builds completed before that date, the deadline is 3 months. Completion is when the local council issues you with a completion certificate, or the property becomes habitable. Thousands of pounds are recovered by many in this way. In the case of a £200,000 construction, you can recover the £40,000 VAT paid on eligible materials you purchase yourself. Always check with HMRC when in doubt. How Much VAT Can I Claim Back on My Self-Build? You can claim back most, but not all, of the VAT you pay on building materials for your self-build. The standard rate is 20%, and there’s no maximum limit. It depends entirely on what you spend. In most cases, construction services (such as labour from builders or electricians) are zero-rated, so you don’t pay VAT on them in the first place. The refund mainly applies to building materials you buy yourself from VAT-registered suppliers. For example: If you spend £100,000 on eligible materials, you’ll pay £20,000 VAT, which can be reclaimed through the VAT refund scheme. However, not every item qualifies. For instance, carpets are excluded, but floor tiles and wooden flooring are eligible. So, if you spend £5,000 on carpets and pay £1,000 VAT, you can’t reclaim that £1,000. Your total claim equals the VAT on all eligible invoices you submit to HMRC, supported by receipts. What Will I Need to Submit with My VAT Claim? There are documents you require to file with your VAT claim. Begin with evidence of completion of the new build. Obtain a completion certificate from your local building authorities. This demonstrates that the build is complete. Included are planning permission papers, all the approvals, including Section 106 agreements (where applicable). These include things such as affordable housing regulations. When the permissions were changed, provide the updated ones. Building plans are useful as well. What you built, these presents and correspond to the permission. The most important ones are the VAT invoices. Record all of them under materials purchased. Every invoice should include the name of the supplier, VAT number, date, your name and address (when you are buying in large quantities of £250 and above), description of the item, price, and the amount of VAT. If you file online, you will not submit them initially, but HMRC will request a selection for inspection. List all of them using the HMRC invoice template (VAT431NB or VAT431C). This template helps you record the details and calculate the totals. In case you hire contractors, their services for a new build should be zero-rated (0% VAT) and you will have no VAT to claim back on their invoices. HMRC rejects your claim if your claim is missing important documents. Double-check before sending. How Do I Submit My Claim? You can file your claim fairly simply online or by post. One can go to the HMRC site and use their online service to get quick results. Search and click “claim a VAT refund as a DIY housebuilder”. Complete the form with your information, project information, and the sum of the claim. Download form VAT431NB at gov.uk. Complete it, and send it to the address on the form. Add all the supporting papers; more of this later. Appoint an agent should you need assistance, such as a builder or accountant. Use form 64-8 for this. But HMRC refunds you the money only to your bank account. Processing takes time. Online claims are usually processed within about 30 working days, while postal claims may take a little longer. If HMRC finds any errors or missing information, they’ll contact you for clarification. Respond to them at your earliest convenience to avoid delays. You can follow your claim online. Keep copies of everything. In case you have committed intentional mistakes, you will be penalised. What Kind of Building Projects Can I Reclaim the VAT On? You can recover the VAT on certain building projects. The main ones are …

What is the Best Accounting Software for Landlords?

George20/05/2025Accounting , accounting software , Landlord

Managing rental properties requires careful tracking of income, expenses, and taxes. Landlords can manage their business finances and expenses efficiently if they have an idea about the accounting software for landlords. Therefore, choosing the best accounting software is essential. The right software saves time and helps avoid costly mistakes. In this article, we will guide you in finding the perfect software for tracking all the records. Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help with the best accounting software for landlords. What’s the Accounting Software for Landlords? Accounting software for landlords is a tool that helps property owners cover their income and charges. Landlord account software generally includes features such as rental coverage, tenant screening, and rent collection. Moreover, accounting software helps landlords track rent payments, expenses, and profits easily. It also simplifies tax filing and financial reporting. This tool keeps property finances organised and accurate. Here are some points that emphasize the importance of using accounting software. Save property details Save tenant information Manage rent and tenants Logs of legal documents Helps manage accounts Managing records and charges Manage the mortgage loan Creates duty reports and lines Provides income duty data 5 Best Accounting Software for Landlords Here are some of the five best accounting software that have unique features and characteristics. Every software has its plus points over the other due to its features. However, you can choose one that best aligns with your needs and fulfils all your requirements. 1. Xero As a landlord, managing finances is essential for the smooth flow of cash. Xero is robust accounting software that automates many tasks, such as invoicing and reporting. It also provides landlords with all the rates they need to manage backing. Automated accounting tools in Xero are available to help you record your costs, collect online payments, and file taxes. Additionally, the features of accounts allow you to manage your company’s finances so they remain secure and easy to manage. Due to this, landlords looking to improve their account management and increase efficiency should consider Xero. It is a valuable resource when making decisions. The following are some major tasks that a landlord can perform by using this innovative online tool: Follow your business with a covering bank account. Prepare your duty returns, making the process accelerated and easy. Manage finance and stay at the top of the account system Track finances and see where your business works well and where it can use enhancement. 2. QuickFile Landlords can rely on QuickFile to oversee tenants and keep their records organised digitally. You can easily set up tenants and assign houses and apartments to rent. This can create monthly or quarterly rent demands. Furthermore, the software gathers transactions automatically from your bank, helps with assigning tags to property expenses, and sets up rule-based bank reconciliation. Its reporting can generate information on income and expenses for each separate property. Since QuickFile is making taxes digital-ready, you can quickly and easily submit tax summaries every quarter and your end-of-year return. Hence, QuickFile is the best tool for landlords looking to simplify their accounting and comply with tax laws properly. 3. Landlord’s Vision Landlord Vision is a reliable tool built for landlords, making it much simpler than dealing with difficult spreadsheets and old software. Everything in your portfolio can be accessed from any device and easily and conveniently stored with this software. By using property accounting tools, you can follow your budget in real-time, easily keep records of your earnings and costs, and scan receipts from anywhere using your phone. Furthermore, you can use Landlord Vision to handle various property-related matters such as mortgages, loans, certificates, and supplier invoices, together with early warning notifications and task reminders. It provides all the necessary services. 4. Re-Leased If all of your investment properties are commercial rentals, Re-Leased offers exclusive features and so is perfect for you. Re-Leased is built only for managing commercial rentals more smoothly. The accounting suite in this software is comprehensive, and it can be used together with Xero, QuickBooks, or Sage for simple bookkeeping. You can get a personalised quote by entering your portfolio’s details. So, the prices will depend on the size of your commercial real estate business and cover all the features and management duties that large companies find important. 5. Property Hawk Property Hawk helps landlords track their rent, note their expenses, keep documents safe, and set reminders to use. Carrying on, the convenient document centre includes sample documents, so you can use an assured tenancy agreement to speed up and streamline any of your landlord paperwork. You can use Property Hawk without charge, but since support is limited, the program may not always have the latest updates. As a consequence, Property Hawk appears old-fashioned since it has very few features, is not very user-friendly, and is designed only for use on a computer. Conclusion To sum up, choosing the right accounting software can make the rental process simpler and more effective. The best accounting software for landlords helps you track rent, manage charges, save documents, and stay updated on assessments. Whether you are just starting or managing multiple properties, using the right tool will save you time, reduce stress, and keep your finances organised. Reach out to our intelligent and clever-minded guys to get the answer to your queries in the UK, we will get to your answers quickly. We will help to decide how to deal with your tax implications. Disclaimer: The information about the best accounting software for landlords provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

What is the Mortgage Interest Restriction in the UK?

George27/10/2023Landlord

Are you a landlord wondering how the Mortgage Interest Restriction (MIR) affects your taxes? Read this blog till the end. MIR is a policy that was introduced by the UK government in 2017. It was gradually applied over the next 4 years to give the landlords time to adjust to the changes. It affects your taxes and income; therefore, you need to know about it. In this blog, we will cover a range of questions to give you a complete understanding of the topic. Firstly, we will look at what Mortgage Interest Restriction is and why the government imposed it. Then, we will see who is affected by this change, and if you are, how can you calculate your new tax? Let’s begin! If you are looking for regular tax updates as a landlord, visit CruseBurke! What is Mortgage Interest Restriction (MIR)? Mortgage Interest Restriction restricts the tax relief for financing costs on residential properties to the basic rate of income tax. It changed how much tax relief will be provided to you for various finance costs, which include: Mortgage Interest Interest on loans taken for furnishing Charges paid when taking out a loan or a mortgage This is what the MIR policy entails, but what was the reason for imposing it? Why Did the Government Impose Mortgage Interest Restrictions? Prior to the fiscal year 2016–17, you could claim almost all of your mortgage interest against your rental income. This meant that there were some landlords who were at an advantage with a higher rental income. To make the system fairer, the government introduced the Mortgage Interest Restriction policy. They reduced your tax relief if you had a high income and were paying the income tax at a higher rate. The tax relief was gradually reduced over a period of four years. According to HMRC, the deductions from property income will be restricted to: 75% for 2017-18 50% for 2018-19 25% for 2019–20, 0% for 2020-21 and beyond Therefore, the individuals will only be able to claim a basic rate tax deduction of 20 percent. This reduction is from their Income Tax Liability on the portion of finance costs that are not deducted while calculating the profit. Implications of Mortgage Interest Restriction on Different Sectors: The MIR impacts a lot of people in the economy, and therefore the economy itself. Following are some of the major implications of this policy: 1. Impact on the Economy The government expects that MIR could reduce the overall demand for housing, but only marginally. However, there is not a significant impact on the prices of houses or rents. This is because only a small portion of people are affected by the policy. 2. Impact on Landlords The government of the UK expects that only 20 percent of landlords will be affected by the introduction of MIR. The individuals who were getting a higher rate of tax relief will have to bear more costs to make the market fairer. 3. Impact on Equality The policy is targeted at promoting equality. Those with higher rental incomes will have to pay more. However, if you are in the protected characteristic group, you will not be affected. Now that you know why the government imposed the restriction, let’s see if you are affected by it. Are You Affected by MIR? The Mortgage Interest restriction only affects those who are paying a higher tax rate of 40 percent on their income. Previously, you could reclaim 40 percent of your mortgage interest; now, that rate has been reduced to 20 percent. However, if you were a basic-rate taxpayer, you were already getting only 20 percent tax relief, and therefore, nothing changed for you. How Can We Help? If you are a landlord who has multiple properties and you are paying a higher income tax, you need help. Therefore, we at CruseBurke provide you with the best accounting services in London. That’s not all; we ensure that you get the benefits that the government allows and plan your taxes ahead of time. Click here to get an instant quote from our team at CruseBurke! A Quick Summary! Mortgage Interest Restriction is a policy that reduces the tax relief that you can claim on finance costs. This also includes the fees paid on getting loans and mortgages as well as loans taken out for furnishing. The policy makes the market a bit fairer by disincentivising landlords with higher incomes. If you were getting 40 percent tax relief on mortgage interests, now you will only be eligible for 20 percent. Therefore, it is recommended that high-rate tax payers partner with a reliable accounting firm to avoid regulatory fines. We at CruseBurke provide you with the best tax advisory and accounting services in the UK. Click here, and we will call you right back!

Cash Basis for Landlords – When Does it Apply?

George01/09/2022Accountants , Landlord , Tax Issues

In the process to be preparing for the tax returns and submissions, there is a need to gather information from the customers as well. In the case of unincorporated businesses, this information will help to know when the first year for the application of a new cash basis for the landlords is. If you aim to calculate accurate rental income and profits, you should be well aware of the updated implications and rules of the cash basis as a landlord. If you are still confused as a landlord about the updated rules of the cash basis for landlords, we have got you covered here. We will learn about the basics of cash basis and at what time it applies to you, how cash basis works for you, and what the chances of losses are in the case of unincorporated landlords. Reach out to one of our professionals to learn the best way to choose a cash basis for landlords in the property business. We will love to offer instant help! Cash Basis for Landlords – When Does it Apply? As of 2025, the cash basis automatically applies to most unincorporated landlords if their total rental income is under £150,000 per tax year. It applies in the following scenarios: You are an individual or partnership of individuals (not companies or LLPs). Your total rental income from all UK properties is below the threshold. You haven’t opted out by choosing to use the accruals basis on your tax return. You must use the same accounting method for all properties in a given tax year. How Does a Cash Basis Work? The cash basis is mostly operational for small trades. There is a detailed guide on the use of the cash basis for landlords who are associated with the letting business as a small trade. This detailed guide is available on the website of HMRC to help people and educate them to follow the accurate ways to follow the process. A few key factors you should consider after adopting a cash basis include the following: Under the cash basis: Rental income is recognised when received, not when invoiced. Expenses are deducted when paid, not when incurred. It’s simpler than traditional accounting and avoids dealing with accruals, bad debts, or year-end adjustments. Loan interest and finance costs are restricted by the Section 24 rules, meaning you can only claim a 20% basic rate tax credit, rather than full tax relief. If you switch between cash basis and accruals basis, the Change of Accounting Policy (COAP) rules apply. You’ll need to make transitional adjustments to prevent double counting of income or expenses. Unincorporated Landlord – What are the Losses? If your rental business makes a loss under the cash basis, you can carry forward that loss to offset against future profits from the same UK property business. However, you cannot offset it against other income, such as employment income, unless the rental qualifies as a trade (e.g. furnished holiday lets). You should also be aware that claiming the £1,000 property income allowance (if eligible) means you cannot claim any other expenses — so it may not be beneficial if your actual expenses exceed that amount. The Bottom Line Now that you have gathered a fair amount of information about the cash basis for landlords, we can say that a cash basis can turn out to be beneficial for the landlord only when the right amount of information is gathered and awareness of taking the right action is there. Otherwise, the consequences will no longer be beneficial and in favour of your property business. You can always seek professional help if you aim to make an accurate process and want to avoid the mistakes that can make you suffer in the future. We hope these few minutes of reading will be helpful in making the right business choice. Get in touch with our young, clever and tech-driven professionals if you want to learn more about the cash basis for landlords. Disclaimer: The information about the cash basis for landlords provided in this blog includes text and graphics of a general nature. It does not intend to disregard any of the professional advice.

HMRC Receives Airbnb Letting Data – A Basic Guide!

George29/08/2022Accountants for Contractors , Business , Landlord

It is imperative for the landlords and other individuals who are associated with the business of property to realise that it is nearly impossible to keep any letting detail hidden from HMRC. Airbnb will be a source of information for HMRC for any such activity happening in the market so it is better that you disclose all your property lettings and income to HMRC before they find it out and charge you a fine for filing wrong tax returns. If you are doing any such thing, you better disclose it as early as now and include all the details of your prior years as well. HMRC Airbnb tax UK accounts are in an agreement that says Airbnb will be a source of all the hosts in the UK which means they will provide all the letting property information to HMRC. If you are associated with the letting properties and want to learn more, we have got you covered here. In this guide, we have gathered all the basic information about HMRC Airbnb tax guidance, how to declare it to HMRC and what exactly is there to be declared. Reach out to our smart team of professionals to get your HMRC Airbnb tax queries answered quickly. We will help to let you decide about tax relief with a clear mind. HMRC Airbnb Tax – Targeted Enquiries In association with HMRC Airbnb tax, Airbnb will allow HMRC to have access to the information and launch opening enquiries which aim to enquire about the tax affairs of property dealers. The enquiry will be launched especially for the individuals who hide their information and accurate earnings from HMRC and have not been found to declare their income in the previous years. 31st January is normally the deadline for opening such an enquiry for the prior years, this will ensure whether the tax was filed on time or not. HMRC can go back in years to check your previous records whether they are accurate and clear or not. In some cases, Airbnb allows going back up to 20 years of records to have a clear enquiry if a letting business is under investigation by HMRC. This is why HMRC claims to sort out any tax payment issues of landlords in the year 2021-22. This means that HMRC will like to go back in years to have a detailed observation of your tax payments. Airbnb Guidance This quick way that HMRC has launched to enquire about the old and new tax payments has put severe pressure on online platforms and the gig economy. The tax authorities are also increasing the level of pressure on these platforms to ensure the accuracy of the process. This will bring surety around the world that all the customers are paying tax well in time. To help people and spread awareness among them Airbnb has also provided PwC with written notes of information in this regard on their website. This will help to educate people. If you aim to educate yourself on this topic as a landlord, make sure you reach out to the updated information. It is important to know the tax consideration on the property to keep yourself away from any kind of fine issuance from HMRC. Moreover, this piece of information shared on the website of Airbnb does not cover the information about how to declare your income for precious years or what exactly is required to do when you are under an enquiry. What to Declare? According to the Airbnb report insight, typically the individual who is working as a UK host is making quite a good amount within the period of a year. In case of a landlord who aims to let only some part or portion of their main residence is not liable to make any such declaration. However, the rules are quite different in the case of the landlords who are building and letting commercial and resident properties for a source of income. If you fail to declare, be ready to face the struggle of penalties and fines issued by HMRC. Because they will know it anyway with or working your declaration. If you are building a second home or a third home to let and that is adding to your income, you are now obliged to create and report and bring this into the knowledge of HMRC. Declaration – How to Do it? If an individual who is in the role of a landlord has not made a declaration about her excessive income to HMRC and it is not even covered with rent-a-room relief, there should be a requirement for swift action to correct this process. The same quick actions are required for the individuals who have filed the tax returns well in time but are still stuck with the amendment dates, such amendment delays should be fixed as a priority. Moreover, you should be aware that Airbnb’s service only allows disclosing the income that they are getting from the letting property business in the UK and not the other sources of income. The Bottom Line Now that you have gathered a fair amount of information about the HMRC Airbnb tax, we can say that it is easy for HMRC to receive the letting data of current and previous years from Airbnb. So it is advisable to declare the information and excessive income sources yourself before you go under an investigation. You might require to seek professional help in this regard if you have a record of not informing HMRC about your letting data in the previous years to get the records right. We hope these few minutes of reading have helped you to develop a better understanding. Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly. Get in touch now and we will come up with fine solutions. Disclaimer: The information about HMRC Airbnb tax provided in this blog includes text …

What is Property Income Allowance?

George05/01/2022Landlord , Property , Tax Issues

The income you earn from land or property, along with the rental income gained from renting a part of a flat or house (like a single room) is known as property income. It also includes income generated from caravans or houseboats. Similar to other incomes, it is also taxed in the UK, unless the property qualifies for reliefs or allowances. The amount of tax you need to pay on this income will be subject to your income tax band. In this blog, you’ll learn the what are tax rates for property income, what is property income allowance, when you can’t use this allowance and what records you may need to make a claim? Let’s explore! We save your time, money, and stress by handling all your finances and business problems in no time! Call us on 020 8686 8876 or email us today. What Tax Do I Need to Pay on my Property Income? The income tax band determines the rate of tax you need to pay. The rates of property income are the same as those of your personal. However, you may fall under the higher rate band if your property income and other income are added together. Here is the income tax you need to pay as per your income tax band: What is Property Income Allowance? It is a standard allowance or tax exemption on which no property tax is payable. Currently, in 2021-22, you get a tax free allowance of £1,000 a year (from 6 April 2017 onward). If your income is below this allowance, you don’t need to inform HMRC or declare any tax return. However, sometimes you need to complete a tax return even if your income is below £1,000. But, if it’s higher you need to declare your property income and complete a tax return. And you may need to file a tax return for other income. You must inform HMRC if: your property income is more than the property allowance from £1,000 up to £2,500 the property income is more than £2,500, you need to register for self-assessment Want to register for Self-Assessment? Allow us to do the hassle on your behalf. Save your time by filling out this form and let us handle everything! In case, your annual gross property income from one or more sources is over £1,000 you can still use these allowances, instead of subtracting any expenses or allowances. With this allowance, you can subtract £1,000 from your income as partial relief which should not be over your income. If you find that your expenses are over your income, you need to consider availing of expenses instead of the allowance. And, if you own property jointly, you’re each owner is eligible for the allowance as per the share of the rental income. When You Can’t Use this Allowance? You are not eligible to use the property allowance if you are making income from: employment (your employer/employer of your spouse/civil partner) a partnership where you or someone associated with you are partners a company owned or controlled by you or someone associated with you You are also not eligible to use property allowance if you: deduct expenses from income by renting a room in your own home, rather than availing Rent a Room Scheme claim the tax reducer for finance costs (such as mortgage interest for residential property) Records to Keep for Property Allowance You need to keep records of your income to claim for this allowance. Records may include: a spreadsheet of your income receipts copies of your invoices (both paper or electronic) bank statements emails indicating income earned bank deposit pay-in records statements from the company who make payment to you a diary/appointments book showing your income from the customers When Do You Need to Contact HMRC? You need to get in touch with the Income-tax helpline if: you don’t know whether you are eligible for this allowance or not you’re not registered for self-assessment and have paid tax via PAYE on some of your property income (you may be due a refund) Quick Sum Up So, that’s all about the property income allowance that is £1,000 for the year 2025-26. The tax you will pay on your property income would be the same as your personal income. However, you may fall within the higher rate tax band when your property and other income is combined. You don’t need to file a return if your property income falls below the property allowance. And make sure to keep records to provide HMRC with proof of your property income. Our property accountants are reliable and transparent. If you need any help with accounting, tax payroll, and other finance-related issues. We will solve your tax issues in no time and at an affordable price! So, contact us now! Disclaimer: The information is taken from the HMRC and is intended to provide general information.

Everything that you Need to know about Section 24 as a Landlord!

George07/12/2021Landlord , Property , Taxation

There are multiple cases in which we find the landlords confused about section 24. This is also known as the tenant tax. This basic guide will help you understand section 24 in a better way. Section 24 was introduced in April 2017 by the Government. If we explain in simple words, the right of deducting the mortgage and agreement fees is reduced due to section 24 which was happening before in the dealing of rental income. Because of this change in tenant tax, landlords tend to face higher taxes and pay more taxes than ever. However, before we delve into further discussion, we need to have a look at the points of discussion in this article: Reason for Introducing Section 24 Section 24 – How does it Work? How are Landlords Affected The Bottom Line Are you looking for a helping hand to solve the accounts that you are stuck with? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Reason for Introducing Section 24: The rapid growth of the private rental sector is one of the major reasons why section 24 was introduced. There are certain reasons involved and some of them are discussed below as well: To slow down the pace and the moving tendency was a major purpose. Due to the foreseeable property bubble danger in 2015, the safer ways were taken because if the property bubble burst out this could cause serious damage to the economy of the UK. Ensure to remove the less professional landlords from the field by making hard rules to earn profit by letting the property. To boost the tenants’ stability in the market. Making it easy for first-time buyers to gain confidence in order to foothold for the first time in the ladder of property letting. More options of properties will be in the market for making good purchase options. Moreover, several professionals do not really agree with the purpose and rules of section 24 that go against the landlords and lower their pace of profits in the market. There is a view that this is making the landlords hike their rents in order to gain more and more profits to stay in the market and make their rental income stable as well. For those landlords who are still willing to be in the market, they are bound to try new ways and models to continue being part of the letting property business. Are you a landlord who is seeking professional help to know more? Give it a try and talk to one of our professionals today. Section 24 – How Does it Work? When it comes to the rules and functioning of section 24, the landlords’ rights are put to limit and they can’t offset finance costs at the time tax liability is being calculated. This makes the landlord pay more tax than before. This also means that the landlords who are in the higher tax bracket will face the loss of tax relief. This can further push them to the further tax bands as well. The increase in gross income means that it will affect student loan repayment, child benefits and tax credits etc. How are Landlords Affected: Landlords involved in finance costs are super affected by the implementation of the rules that are under section 24. This can include the following types of landlords as well: Accidental landlords Landlords who are working as an individual in the property business. The Landlords who are non-UK Residentials but have to let properties here are affected as well. The Bottom Line: Now that you have developed a better understanding of section 24 and how does it work, we can sum up the discussion by saying that there are serious concerns that prove how individuals in the letting property business can be affected by the rules of section 24 and this is further acknowledged by the professionals. However, if you intend to continue in the letting property, others are a chance to gain profits by trying multiple structures. We hope this article helped to provide fair information to develop a better understanding. Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package! Disclaimer: This article intends to provide general information based on section 24 and relevant details.

What Is HMO? A Basic Guide for Beginners

George04/10/2021Finance , Landlord , Property

The landlords can have more occupants and earn more rental revenue by letting an HMO (House in Multiple Occupations). However, there are many rules and responsibilities like minimising size requirements, overcrowding, and licensing to HMO landlords. To know more about HMOs’ responsibilities, read this blog till the end. Talk to one of our chartered accountants in Croydon about the online accountancy services we provide. We are just a click away! If you want our service of managing HMO and its tenants, then feel free to contact us! What is HMO (House in Multiple Occupations)? It is a property that has three or more people who do not form a single household and typically share one or more bathroom, toilet, or kitchen facilities. According to the government, the households include singles, married or civil partners (couples), and carers & foster parents. For instance, three people who do not relate to each other in three rooms will make up three households, whereas a property with two couples (married or civil partners) will form two households. HMO can normally take the following forms: A guardian occupied property Shared houses Guesthouses Hostels Residential care homes Certain bed and breakfast establishments Bedsit accommodation Houses let to lodgers The Responsibilities for Letting an HMO As a landlord, you are required to fulfill your legal liabilities even if you let an HMO. These legal responsibilities include meeting energy efficiency rules and protecting deposits. However, the following are some additional responsibilities of the landlords of HMOs such as: Carrying out a gas safety check annually Ensuring the property is not overcrowded Maintaining as well as repairing facilities and communal areas Providing washing and cooking facilities and enough waste bins for many tenants in the property At least once every five years, checking the electrical installations Ensuring the fire risk assessment is conducted properly Installing heat detectors in kitchens and smoke alarms; hence, proper fire safety equipment should be installed. Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package! Do You Require a License for an HMO? Every license will identify the total number of individuals for the occupation of the property. Moreover, it will also identify the number of years it will be valid. For an HMO, you need a license when in the property there are: Two or more separate households living Five or more tenants living Through your local council, you should apply for a license. The terms of the license will be set by the individual councils. You can ask your letting agent to apply for a license, or you can apply yourself. When applying for a license, a landlord has to inform the following different parties, and the details of these parties must be pass on to the council. The occupants who have more than three years left on the current tenancy The lender in case you have a buy-to-let mortgage The freeholder of the property (if any) Any other owners of the property Conclusion We hope now you have understood what is HMO and what are the responsibilities of an HMO landlord. Finally, we will conclude our blog by saying that managing all your properties by yourself is complex. So, if you want to grow your property portfolio, we recommend you take help from a professional letting agent to manage your house of multiple occupants (HMO). Are you looking for a professional letting agent? Then, look no other than CruseBurke. We are qualified, cost-effective accountants that will properly manage your HMO and its tenants at an affordable package! So, contact us right away! Disclaimer: This blog contains general information on what is HMO.

Property Tax UK: Brief Guide to Buying Residential Property in the UK

George11/08/2021Landlord , Personal Tax , Tax Issues , VAT

Taxes are always unexciting. However, if you want to buy or sell a property in the UK, you need to know the ins and outs of property taxes in the UK. So let’s delve deep into it. Currently, the UK government is focusing more on imposing taxes on residential property. In this instance, certain changes have been made that have added more complexity to the property tax system. In addition, the UK property market has also attracted a large number of foreign buyers to invest in residential properties. So, if you are pondering to buy a property in the UK, you need to take expert advice from our tax accountant before making a final decision. In this blog, we’ll have a look at some of the main property taxes in the UK. Let’s kick off with Stamp Duty Land Tax (SDLT)! Want to buy or sell a UK property, get bespoke tax advice beforehand from our experts to be on the safe side. Contact us right away! Stamp Duty Land Tax (SDLT) Whenever you buy a residential property in the UK, you need to pay SDLT. The rate of tax depends on the worth and nature of the property. There are various tax rates depending on the different tax bands of the value of the property. Here is the table to show the SDLT rates from 1st July to 30th September 2021 as per your property value: However, these rates vary onward from 1st October 2021 In case of buying your first home from 1st July 2021 onward. You are exempted from SDLT up to the purchase of £300,000. In addition, you need to pay 5% if it is from £300,001 to £500,000. You need to pay an additional 3% if you buy a new or additional residential property. If you’re a non-UK resident (not present in the UK for 6 months) you need to pay a 2% surcharge on purchasing a residential property in England/ Northern Ireland. There are many reliefs and exemptions available as per your circumstances. Get in touch with our accountants to mitigate SDLT! Inheritance Tax (IHT) When it comes to property tax in the UK, you can’t overlook inheritance tax. The beneficiaries of the deceased person need to pay 40% of the IHT if the value of the estate is above the nil rate band £325,000. There are many ways to mitigate IHT by transferring the properties to direct heirs like a spouse or civil partner. In addition, you can also provide gifts to your children, donate assets to charities and put the assets into a trust to reduce or avoid IHT. These techniques seem appealing, however, there are severe tax consequences. Therefore, taking advice on inheritance tax is beneficial to avoid paying extra taxes. Capital Gains Tax (CGT) Along with SDLT and IHT, Capital Gains Tax is a tax payable on the increased value of the property at the time of disposal or selling. If a property is not your main home (like buy to let properties, business premises, inherited property or land) and you make a gain by selling or disposing of, you need to pay 28% Capital gains Tax. Sometimes this rate may vary. It should be payable within 30 days of disposal. Although gifts are exempted from CGT, but you need to remember that gifts can have a wide range of tax consequences. So it is a better practice to take expert advice before making a gift. Worried about the Capital Gains Tax and ATED, let our accountant handle it! Annual Tax on Enveloped Dwellings (ATED) ATED is paid mainly by companies owning a residential property above £500,000. This amount is charged as per different bands based on the property’s value. Here is the table that shows the annual charges of the property value from 1st April to 21st March 2022: Property value Annual charge £500,000 to £1 million £3,700 £1 million to £2 million £7,500 £2 million to £5 million £25,300 £5 million to £10 million £59,100 £10 million up to £20 million £118,600 Over £20 million £237,400 These rates increase on annual basis as per the inflation. You can claim reliefs on these in an ATED return. Income Tax If you’re buying a residential property for the purposes of letting, you need to pay income tax on the rent received by the tenant. The rate of income tax starts from 0% to 45% as per the amount of rental yield. The deadline to file a UK tax return is at the end of the tax year (6 April – 5 April) landlords (non-residential) need to submit a UK tax return to show their rental yield, and pay any income tax (by the following 31 January). Succession Planning If a deceased person has not left a will before dying, the government will distribute the estate under UK intestacy law. This law may not be favourable for you when it comes to taxes. Therefore, it is advisable to prepare a will while purchasing a property in the UK. By doing this, it will provide certainty for passing wealth to the person who’s mentioned in the will and it will ensure the tax position of your estate at the time of death. Quick Sum Up Hopefully, this blog has helped you to know the basic details of property tax in the UK. So while buying, selling, transferring or inheriting property in the UK, you need to consider the property taxes like SDLT, CGT, IHT, ATED and income tax. Bear in mind that these taxes vary based on various factors and keep on changing from time to time. Furthermore, the rates are not the same for all. These are different for residential and commercial landlords and for the native and non-natives. In addition, there are many allowances and exemptions available to avoid or mitigate the property taxes of the UK. So taking advice from a tax expert is recommended for detailed tax and …

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