Landlord tax return services

We are specialist property accountants for buy to let landlords based in London and Surrey. We provide landlord tax return services for a fixed fee that ensures that the tax liability of landlords is kept to a minimum. We provide landlord tax return services to both UK resident and overseas resident landlords.

If you own a property and receive rental income in the UK, you will have certain responsibilities towards HM Revenue and Customs (HMRC) and that is where Martax Accountants can help to fulfill all your obligations for being a landlord. We provide our landlord tax return services in London, Kingston Upon Thames, Wimbledon, Cobham, Weybridge and all the surrounding boroughs in London and Surrey.

Whether you are renting a room, a property/flat for long term let, or running a property business as a Furnished Holiday Let (FHL), our experts can help provide you with the best advice and on-going support to minimise your tax bill. Our landlord tax expert can discuss your tax needs over the phone, in our offices or at a place convenient to you.

UK LANDLORD Martax Accountants

What is income from property?

If a person carries on a business for generating income from land in the UK, this will be called income from UK property. Income from a UK property includes rents from properties such as houses and flats or part of a flat or house, such as a room or a parking space. Property income can also come from other activities related to land such as shooting or fishing rights.

Income from property does not include income from a trade such as farming, running a hotel or carrying on an unrelated business. Profits relating to a trade are taxable as self-employment income.

Do I have to pay tax on income from property?

Yes, you are liable to pay tax on your property income if the taxable profits are more than your personal allowances or other specific reliefs.

Rates of Tax

The rates of tax you pay on your rental profit depends on your total income for the tax year, from all sources of your income e.g. employment, self-employment, saving income, dividends etc.

Income Tax Rates 2022/23
BandTaxable profitsTax Rate
Personal allowanceUp to £12,5700%
Basic rate£12,571 to £50,27020%
High rate£50,271 to £150,00040%
Additional rateOver £150,00145%

What are your responsibilities towards HMRC as a Landlord?

  • When you rent a property, you must tell HMRC as you may have to pay income tax. You must register yourself for self-assessment by 5 October following the tax year you had rental income
  • You may need to pay income tax on any profit you make from renting out property. How much tax you pay will depend on your overall total income for the tax year

How to calculate your taxable rental profits?

Profits from rental property business are calculated on an accrual basis. This means that taking rent receivables and deducting any allowable expenses payable. Rent receivables minus expenses payable gives the taxable rental profits or loss for the year. These amounts are not necessarily the amounts physically received and paid in the year, but those which relate to that tax year.
However, there are different rules to follow if you are:

What are allowable expenses?

Expenses are deductible from rents only if they are incurred ‘wholly and exclusively’ for the business of letting. This means that if an expense wasn’t incurred for the purpose of your property rental you can’t offset the cost against the rental income. The most commonly incurred expenses in relation to rental property business are as follows:

  • Agent’s fees and commission
  • Repairs to the property
  • Water charges or council tax
  • Insurance premiums
  • Mortgage interest (Read about changes to tax reliefs from 6 April 2017)
  • Costs of services including wages of gardeners and cleaners
  • Legal fees for lets of a year or less, or for renewing a lease for less than 50 years
  • Accountant’s fees
  • Ground rents or service charges
  • Direct costs such as phone calls, stationary and advertising for new tenants
  • Vehicle running costs (only the proportion used for rental business)

The following is a list of some expenses which are not allowable:

  • The full amount of mortgage payment – only the interest element is allowable in part or full depending on whether you are a basic, higher or additional rate taxpayer
    For more details please read ‘Restriction of finance cost relief for individual landlords – changes from 6 April 2017
  • Personal expenses – you can’t claim any expenses which are not incurred wholly and exclusively for the purposes of rental business.
  • Private telephone calls – you can only claim for the cost of calls relating to letting property
  • Private travel expenses – you can only claim for the cost of travel relating to letting property

Property business losses

Where allowable expenses payable is greater than rent receivables, a property business loss will arise. If a taxpayer has an overall property business loss, it can be carried forward and set against property income from a UK property business in future tax years.

There are exceptions to the above rule as you can’t offset UK rental property losses against the rental profits from furnished holiday lettings and overseas rental properties as there are separate rules which apply to these types of properties.

Rent a Room Relief

If a landlord is letting out a room to a tenant in his main residence, a special relief is available. This is called ‘Rent a Room’ relief. For the tax year 2018/19, if your gross income from renting a room in your main residence does not exceed £7,500 before deduction of any expenses, your rental income will exempt from tax.

Overseas property Business

If you are renting out properties overseas, you should keep the rental income and expenses separate from the UK property rentals.
If a taxpayer lets out an overseas property such as a villa in Spain, any profits are chargeable to tax as income from overseas property business.

To calculate the profit on overseas rental property, the same rules apply as for the UK property business. However, if there is a loss on the overseas property business, it cannot be offset against UK property business income. Overseas property loss can only be set off against the future overseas property income. You might also be able to claim relief against your UK tax bill if you have paid tax on the income.

What Martax can do for you

At Martax, we provide specialist landlord tax return services, including the following:

  • Preparing your annual rental accounts for the properties whether these are residential let, FHLs or commercial properties
  • Calculate your taxable position
  • Advise on claiming all the legitimate expenses to optimize tax savings
  • Complete your tax return using HMRC approved software
  • Deal with all the correspondence and answer your taxation queries
  • Advise you on the tax liability to be payable to HMRC and when they are due

If you need any help or advice in relation to your let properties, please contact us.