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Accountants In Dunfermline: OnTax | Rental Property Tax Return

Welcome to OnTax Accountants Ltd

We would love to talk to you about your business – but we would be even happier to listen...

Typical Landlord Accounting Fees

1 Property

From £30 PM
  • Meetings & Support
  • Book-Keeping
  • Landlord Tax Return

2 - 4 Properties

From £50 PM
  • Meetings & Support
  • Book-Keeping
  • Landlord Tax Return

5 - 8 Properties

From £80 PM
  • Meetings & Support
  • Book-Keeping
  • Landlord Tax Return


Best Accountant For Landlord Tax Returns...

I'm a professional landlord of 10 years and have used many accountants. I have to say Jason at Ontax Accountants in Dunfermline has knowledge that far exceeds any accountant I have ever met. Not only is he a published author on property investment techniques but his knowledge of no money down schemes, option agreements, assured short tenancy agreements as well as showing me how to almost obliterate my tax bill literally left me dumbfounded. I can't praise his service enough.

Mr J Brierley , Portfolio Properties, Fife


OnTax Accountants In Dunfermline
Rental Property Tax Return

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The Dream Of Becoming A Landlord

Have you had the opportunity to rent out a house but are unsure why you should? Do you fancy the idea of investing into a rental property?

Being a landlord can be very rewarding. By renting out a property you are almost guaranteed a monthly income from the rent the tenant will be paying you for staying there. If you like to get involved in projects then perhaps being a landlord might be the right thing for you. You are likely going to be kept busy with maintenance and safety at your property, as well as dealing with any issues which arise or with dealing with tenant queries.

How Do I Register As A Landlord?

You can register as a landlord online with HMRC, all that is required is a few personal details, if you provide us with these details then we can register you as a landlord on your behalf to save you from having to spend time doing this.

Once we register you with HMRC you will be sent out a personal UTR by them in the post and you should forward this onto us when you get it as it is an important reference and we can’t send your tax return away without it.

What Are The Landlords Commitments?

Once you are a landlord you will have certain commitments you will need to abide by.

You will be required to fit and test smoke alarms in any properties you rent out, ensure your properties meet gas/electric and safety requirements, and issue all tenants with an information pack and tenancy agreement as well as supply an energy performance certificate for the property.

Some of these commitments are legal requirements which you will have to bear. Some legal requirements you will need to comply with are detailed a little more below:

Tenancy Agreement- you will be expected to prepare a tenancy agreement for the tenant you rent a property out to. The agreement will confirm the amount of rent the tenant has agreed to pay each month as well as the length of the agreement and possibly even if pets are not allowed in the property.

Energy performance certificate – An energy performance certificate should always be available to a tenant, it is the law to have one of these for your property and it should be up to date.

Gas Safety – You will be required by law to ensure that you have an inspection once a year by a registered gas engineer to make sure that the gas supply in the property is up to standard.

Deposit Scheme – in order to stop landlords keeping tenant deposits when they do not have the right to, the government invented a deposit scheme. This is where tenant’s deposits are to be either placed with a free custodial administered accountant or with an insurance scheme. If the landlord places it with an insurance scheme this means that the landlord keeps the deposit and pays the insurance scheme a premium to pay back the deposit.

Landlord insurance – In order to protect both yourself and your property you should ensure that you have the correct insurance in place. You will need landlord insurance and property insurance to do this. It is likely that you will have invested a substantial amount of money into your rental property and you probably don’t want to risk losing this. Having the landlord insurance in place helps prevent this from happening. You will have insurance to cover such things as fire damage and water damage.

Electrical safety – You will also need to make sure that each time before a tenant moves into your property that you have the electricity supply in the house is safe. The person who carries this out must know what they are talking about and perhaps be at least part qualified as they will need to know if the electrics in the house are up to the legal standards.

What Is The Tax Position?

If you are a landlord you will be required to submit a personal tax return once a year with HMRC.

This will determine how much tax you are expected to pay. How much tax you pay will depend on the profit you make from your property as well as your personal circumstances. The profit made on the property is worked out by taking the rental income you received and subtracting tax deductible expenses.  Tax deductible expenses can help to reduce your tax bill.

Below is a list of some expenses which are allowable to landlords, (if you have paid for these personally):

  • Water, rates, council tax and electricity
  • Building insurance, contents insurance and public liability insurance
  • Mortgage interest (although this is getting phased out for non-limited landlords)
  • Letting agent fees/management fees & accountant fees
  • Costs associated with gardeners, cleaners
  • General maintenance and repairs

However, if you have a ‘capital expense’ you are not allowed to claim this. An expense is classified as a capital expense when you upgrade something in the property, or when you add something to the property and also the initial purchase of furniture and equipment for the property. These items are dealt with on disposal of the property.

Unfortunately, as of the tax year 2016/2017 there will be new changes brought in to landlord tax and these changes are not in the favour of landlords.

The Advantages Of Being A Landlord

As a landlord you will have a monthly income coming in from any tenants you have, (assuming your tenants pay on time).

You will also be able to claim for lots of deductions from expenses for your properties which will bring down your net profit on the property, reducing your tax bill.

It is more than likely that while you are renting your property out to the tenant your property is appreciating in value over time. …….. By the time you would like to sell the property there is a good chance that you could make a profit on it.

Having rental properties can end up being a bit like having your own business in some ways and this can be rewarding thing to some people.

This can end up being a long term security for you, it is ongoing income which you could save for a rainy day or maybe keep it aside for you pension later in life.

You can use your rental property proceeds towards your pension. By doing this you are saving for the future but you have the ability to dip into it if you need to whereas you can’t do this with a normal pension.

The Dis-Advantages Of Being A Landlord

When you are a landlord there is always the risk that the tenant you have might not pay their rent. Even if you think you have a really good tenant there is no guarantee that they are going to always pay their rent, whether they pay it late or not at all.

Aside from the worry of a tenant not paying is the risk that you might struggle to actually get a tenant. You are not always guaranteed to have someone in your rental property and therefore while it is sitting vacant you are going to be losing money on it because you will still have to pay the mortgage and other such expenses.

Being a landlord can be a very time consuming job. This is due to the fact you will have to deal with contracts, tenants, any issues, repairs and maintenance as well as ensuring you pay your tax on time.

It is likely that you will have regular payments you will be required to make on your rental properties. Such costs might include property insurance, landlord insurance, the cost of gas safety certificated and the cost of other such repairs.

As a landlord you should also know to some extent the legal procedure involved in evicting a tenant. For example in the case of a tenant not paying you rent for a substantial period of time and you have tried to get them to pay then you have a right to serve an eviction notice but there is a procedure you must follow in doing so.

You can end up being held responsible for the behaviour of your tenants. If any tenants act in an antisocial way then you will be responsible for ensuring they don’t do it again, if you don’t make an attempt to stop the antisocial behaviour then you could be issued with an antisocial behavioural note. If you then still fail to do anything about it the council can ask the court to stop rent payments to you and give the council control of the property.

You will be taxed on all profits made in that tax year.

The Pro's & Cons Of Being A Landlord

Being a landlord can be very rewarding and it is well known that a lot of individuals choose to invest in property in order to start a pension pot.

You can save the money you make and out it toward your pension but if you need to dip into it for whatever reason you have that option too. This is one of the biggest advantages of investing in property as it can end up being security for you in later life.

It is also clear that being a landlord can be a hands on job and you will more than likely need to be involved in the maintenance of the property to ensure that they are up to standard.

If you think you have what it takes and would like to become a landlord then let us know and we will be more than happy to assist you through the process.

Frequently Asked Questions

I Don't Make Any Rental Profit, Must I Still Do A Tax Return?

HMRC will tell you that if your rental profits are below £2500 then you may not need to submit a tax return. This is not entirely correct as you could be losing out by doing so. For a more accurate answer, bring your data to us and we will ensure you end up in the best possible position.

How Soon Must I Register With HMRC As A Landlord?

Generally speaking, as soon as you start to rent the property! You should  inform them of your rental income right from the beginning so they can send you a self assessment form at the appropriate time. Also, any initial losses need to be registered with HMRC so that they can be offset against later rental property gains.

What If I Own A Foreign Property?

Generally speaking, a UK tax return will still be required to be submitted to HMRC. This is because foreign property rental income is subject to UK tax when brought into the UK. There are some good tax breaks on foreign rental properties as they are treated differently to UK rental properties.

Is My Letting Income Taxable?

Yes, all incomes need to be declared to HMRC. Even if you make a loss during the year this still needs to be declared to HMRC so that the loss can be used up against future years profits thus reducing your tax bill. HMRC will tell you "Whether you need to fill in a tax return will depend on the total rents you get and the profit you make. It will also depend on any other income you’ve had or may get, for example, from employment or pensions", however in our opinion submitting a return is always best.

What Kind Of Expenses Can I Deduct?

The most common types of expenses you can deduct are:

  • maintenance and repairs to the property (but not improvements)
  • water rates, council tax, gas and electricity
  • interest on a mortgage to buy the property
  • contents insurance
  • costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
  • letting agents' fees
  • legal fees for lets of a year or less, or for renewing a lease of less than 50 years
  • direct costs such as phone calls, stationery and advertising for new tenants
  • accountant’s fees
  • rents, ground rents and service charges


Suppose The UK Tax Authorities Don’t Know About My Rental Income?

Lettings agents are required by law to report rental incomes of their clients to HMRC, therefore if you use a letting agent then it is assured that HMRC already know about your property letting. Also, HMRC control the land registry, so will know the addresses of all properties registered to you. Our advice is dont dodge the taxman, come and speak to us today, we will help you sort it all out!

Can I Offset Solicitor Fees Against My Tax?

The costs associated with the acquisition of the property are treated as part of the acquisition cost, this means they dont form part of the trading, or renting. As such, neither can they be offset against trading gains. Instead, a note of these amounts is kept on file and offset against the gain when the property is sold. Any remaining gain is then subject to Capital Gains Tax after allowing for the annual personal exemption.

If I Sell, Will I Be Taxed On The Gain?

In order to arrive at the tax amount due, the original cost of the property plus all relevant capitalised expenses (i.e legal fees, renovation costs etc) are added up. This amount is then compared to the selling price and selling fees to arrive at a "capital gain". Any amount that is over and above the annual exemption of CGT is then subject to tax.

Can I Claim The Cost Of My New Bathroom Or Kitchen Against Tax?

Yes you can. However, whether this is capitalised (for offsetting against the gain on sale at a later date) or is immediaitly offset against rental profits is a matter of decision for both you and your accountant.

I Want To Rent To A Friend/Relative At Reduced Rent, What Are The Tax Implications?

If you rent a property to a connected person then HMRC may enquire as to whether the rent is at the commercial going rate. If it falls below this rate then HMRC may decide to restrict your allowable expenses with a subsequent impact on the amount of tax you will pay.