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Landlords – Don’t forget your self assessment by 31 Jan 2014 It’s that time of year again when the self-assessment tax return is due. Here’s some hints and tips (Please note this is general advise only)
1. Make sure you claim all your deductions
When you submit your tax return, please see below tips on how to claim for all expenses. We would hate for you to miss out: Costs incurred when travelling back-and-to the investment property Advertisement costs Telephone calls made (or text messages sent) in connection with the property Cost of safety certificates Cost of bank charges (i.e. overdraft) Advisory fees e.g. legal and accountancy Subscription to property investment related magazines, products and services 2. Void period expenses
Whilst we hope and endeavour to avoid void periods, if for some reason your buy-to-let property is vacant, the expenses such as utilities and council tax that are incurred can be claimed as a letting expense.
3. Splitting your rent
Make the most of joint ownerships. You may wish to think about putting your buy-to-let property into joint ownership, but then split the rent in the most tax efficient way.
4. Capital gains avoidance
If you sell your buy-to-let property and are facing a large capital gains bill. You can potentially save yourself as a landlord thousands of pounds in tax if you are prepared to ‘move’ into the buy-to-let to claim Private Residence Relief.
5. Carrying forward losses
You may have previously made significant ‘rental losses’ and if you have never made a tax return before it is not uncommon that you may not have previously even realised. You should therefore go back and calculate you rental losses from previous years. This is because these rental losses can be carried forward and set off against rental profits in subsequent tax years.6. Finance costs
If you have borrowed money to your their buy-to-let property, you should ensure that you claim all the loan interest paid relating to the financing of their buy-to-let investments. This includes the following:· Where a landlord may have borrowed money from friends or family · Or taken on credit card or personal loan debt in connection with their rental business (Please do bear in mind that it is only the interest on the loan and not any capital repayments that can be claimed)
Don’t miss out on maximising the amount of expenses that you can claim. The best way of ensuring you are not missing out is the concept of apportionment and the ‘whole and exclusively’ test applied by HMRC to letting expenses.
8. Wear and tear allowance
If your property is let furnished, you may be able to claim up to 10% of the rent as an expense through the wear and tear allowance. This is due to the depreciation cost on the furnishing of your rental property.
9. All landlords have a ‘home office’
You can claim a minimum of £156 without having to provide any written evidence of your expense deduction! This can be for expenses of running your rental business and the associated costs of running a home office. This includes lighting, heating, council tax, property insurance, repairs and even mortgage interest. These costs can be offset against profits, reducing your overall tax bill.
10. Be punctual
Finally, don’t be late! If you don’t want to be at least £100 worse off, then make sure that you get your tax return in before the 31 January. Now that the paper submission deadline has passed, you must now do this online. Unfortunately if there are any capital gains element to your return you will not be able to submit your return electronically. This option is not available for landlords submitting their self-assessment tax return online. However providing the accountant you choose has the correct type of tax software, this can still be done. Landlords however are still able to do it through an accountant with the right type of tax software.
For expert, individual advice speak to a financial advisor or accountant.