“Tax doesn’t have to be taxing” was the strapline for an advertising campaign run by Her Majesty’s Revenues and Customs (HMRC) not so long ago. Unfortunately for many of us around this time of year it is taxing both financially and mentally. With around two weeks left to go until the 31st January deadline to file your tax, it’s important to get it right.
To help make life easier for you, HMRC has set up a webpage detailing what you need to know and do. Most importantly, it tells you what records you should be keeping, what expenses you can claim for and what you can’t. It also runs through how to file your taxes online.
Expenses you can deduct if you pay them yourself are usually:
- General maintenance and repairs to the property,
- Water rates, council tax, gas and electricity
- Insurance – landlords’ policies for buildings, contents and public liability
- Interest on a mortgage to buy the property (although this is changing next tax year)
- Costs of services, including the wages of gardeners and cleaners
- Letting agent fees and management fees
- Legal fees for lets of a year or less, or for renewing a lease for less than 50 years
- Accountant’s fees
- Rents (if you’re sub-letting), ground rents and service charges
- Direct costs such as phone calls, stationery and advertising for new tenants
- Vehicle running costs (only the proportion used for your rental business)
Records that you should keep as evidence are:
- Electricity and gas bills, (unless you already get the cost of this back from the tenant), ground rent and service charges
- The cost of maintenance and repairs (such as extensions but you may need this for any future capital gains calculation)
- Any rent or ground rent that you have to pay
- Fees you pay to a Letting/managing agent
- Legal fees on renewing short leases (but not when they are first made)
- Interest you may pay on a loan obtained for the purchase of the property (i.e. a mortgage) but not capital payments (this changes for individuals from 6 April 2017)
- Other interest directly related to the business may be allowed
- Cost of gas safety certificates or similar requirements
- Building and contents insurance
- Accountancy fees
- Services like cleaning or gardening
- From April 2016 the cost of replacing furniture
- Other direct costs like phone calls, stationary and advertising
If you are lucky enough to be a Homefinders’ landlord, the majority of the above information will be held by us. If you’ve mislaid this information, we’re happy to provide it for you.
For more information on Landlord Tax and the full guide, visit
http://www.hmrc.gov.uk/courses/syob3/letting/HTML/letting_menu.html
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