HMRC treat rental as a taxable business, meaning that people with rental income often need to file a tax return every year.
Landlords need to report and pay tax on rental income unless it is covered by tax exemptions.
The deadlines for reporting rental income are similar to other types of business.
Sometimes renting a room in your house is enough to cause a tax liability.
We are qualified experts at tax accounting for property rental.
We produce accounts to record rents, costs and profits so that landlords know how much they are earning.
We also advise on the property expenses that can be deducted from rental income for tax purposes.
We complete tax returns for landlords to report their taxable rental income to make sure they are HMRC compliant.
When you sell a property, you may have to pay Capital Gains Tax to HMRC.
Depending on the type of property you sell, you may need to report your sale to HMRC within as few as 60 days.
In some situations, tax exemptions can make some or all of the sale free from tax. However the exemptions are not always available, so it is important to check with a tax professional.
HMRC sometimes charge late-filing or late-payment tax penalties even where the person selling the property makes an innocent mistake with their tax affairs. This makes it even more important to ask a qualified tax professional when selling a house or other property.
We are experts in tax and can help to work out whether tax is due and when the sale needs to be reported.
We can guide you through the tax reporting process in a straightforward and understandable way.
As we are Chartered Certified Accountants you also have complete confidence that we are up to date with tax rules and HMRC’s reporting requirements for anyone selling a property.
You usually need to tell HMRC if you sell a house for a profit and it is not your main home. There is an extra form to fill out, which needs to be filed within 60 days of completion. The tighter deadlines apply even if you already file Self-Assessment tax returns.
HMRC can charge penalties and interest if a return is due and hasn’t been filed. This means you should be very careful to check if the sale is one that needs to be declared.
Rental income usually needs to be declared to HMRC through Self-Assessment if you are an individual, or Corporation Tax if the property is held in a company.
Companies owning residential property should be careful to check their ATED (Annual Tax on Enveloped Dwellings) obligations, because HMRC may require your company to report and pay tax even if the house is not generating income.
There are tax exemptions if you rent a room in your house. Generally £7,500 of income can be earned from a lodger each tax year without paying tax on it.
However, the tax-free amount can be reduced if the house you are renting is jointly owned with someone else or if you rent it for less than 12 months. You should check the rules HMRC provide here:
https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet