Self-assessment tax returns for Landlords

Do all landlords have to complete a tax return?

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The tax liability depends on the level of profits and the personal circumstances of each individual. In certain circumstances, an individual does not require to complete a tax return for their rental income but can get their tax paid simply by notifying HMRC.

HMRC notification

HMRC guidance clearly states that you must contact them if you have taxable profits from your rental property. The deadline for this notification is by 5 October following the end of the tax year in which taxable rental profits first arise.

HMRC does state that those with small amounts of profit have a choice between filing a tax return and paying taxes or getting their PAYE code adjusted with the level of profits. HMRC states that ‘it will ask for a return where rental income is £10,000 or more before allowable expenses’ and under this limit is likely to ask for a return where the rental income falls between ‘£2,500 to £9,999 after allowable expenses’.

If the rental income is below the above levels, then the individual may ask HMRC to deal with the profits by adjusting their PAYE code.

However, if HMRC has issued a tax return, it has to be completed even if there is no tax to pay.

Property allowance

From 6 April 2017 you can get up to £1,000 a year in tax-free allowances for property income. If your annual gross property income is £1,000 or less, from one or more property businesses, you don’t have to tell HMRC or declare this income on a tax return. Gross income means the total amount received before any allowances or expenses are taken off.

You must keep records of this income. This is known as ‘full relief’.

If your annual gross property income, from one or more properties, is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances. If your expenses are more than your income it may be beneficial to claim expenses instead of the allowances.

If you use the allowances you can deduct up to £1,000, but not more than the amount of your income. This is known as ‘partial relief’.

If you own a property jointly with others, you’re each eligible for the £1,000 allowance against your share of the gross rental income.

Read further guidance.