To quote HMRC, 'tax doesn't have to be taxing'.
Self Assessment tax returns deadline is 31st January 2016
Most landlords know that taxable rental income has to be reported through their annual tax return to HM Revenue and Customs (HMRC). The last tax year started on 6 April 2014 and ended on 5 April 2015 and the deadline for online Self Assessment tax returns for this period is looming on 31st January 2016, however, HMRC might advise you of a different deadline dependent on your personal tax position.
How do I get started?
Landlords who rent their property using Foxtons can use their online account (My Foxtons) to generate a report on their rental income. By selecting a specific date range, all income and expenditure can be tracked and exported into an excel, CSV or pdf format.
It is also possible to give an accountant access to your online Foxtons portal so they can access and download the information directly. Foxtons rent collection service doesn't cost extra because it is already incorporated in both the comprehensive property management service and the basic lettings service.
Log in to your My Foxtons account or see some of the key features.
What is taxable?
Many people want to know, "if I rent my house out, do I pay tax?" The good news is that only profits from renting out property are liable for income tax.
To calculate your profit you will need to calculate your total rental income in any tax year and deduct any 'allowable expenses'. The remaining sum will be subject to income tax, but remember that the rate of tax you pay will depend on your total taxable income.
HMRC considers any costs that are essential to performing your duties as a landlord or maintaining the property to be 'allowable expenses'. Offsetting these expenses against your rental income can significantly reduce your income tax bill. Read more about on allowable expenses and general guidance on taxable rental income.
Landlords living overseas still have to report rental income derived from residential property in the UK and should contact HMRC directly.