A Detailed Guide to Self-Assessment of Landlords

The Landlord sector is in continuous turbulence. With legislative changes on the horizon, landlords must stay informed. One such change is the Renters Reform Bill, which is expected to become law by late 2024. This bill, which will shift the balance of power towards tenants, could create tension for landlords in various scenarios. Landlords need to understand these changes, which include ensuring homes meet a certain standard, giving tenants more notice before raising rent, and introducing a new dispute resolution process.
The new year brings a significant change in the form of lower Stamp Duty. The residential zero-rate tax threshold is expected to decrease from £250000 to £125000 in March 2025. This change could have a negative impact on landlords’ property disposal plans. As a landlord, you’re likely juggling various property-related tasks, including tax management and compliance with laws and regulations.

You are also responsible for ensuring compliance with your reporting and tax obligations. When you complete your annual self-assessment as a landlord, you have to report your rental income and expenses to HM Revenue and Customs if your annual rental income is more than £1000. The first £1000 of rental income is tax-free, also known as property allowances.

Click on the links below to navigate through the sections of this guide swiftly:

• What is the Process For Landlord Self-Assessment Registration?
• Register with HMRC for Self-Assessment
• Sum Up Your Income
• Takeaway All Allowable Expenses
• Completion of Your Landlord Self-Assessment
• Sort out Your Tax Liability
• Start the Process Early
• Watch Out for Legislative Changes
• Be Punctual with Bookkeeping
• Get Expert Assistance

This blog post explains landlord self-assessment and how Lockhart Amin Accountants can help you with self-assessment tax returns and accounting needs.

What is the Process For Landlord Self-Assessment Registration?

Here is detailed information about the process for landlord self-assessment registration.

Register with HMRC for Self-Assessment

As a landlord with rental income, you must submit your annual landlord self-assessment to HMRC. To do this online, you must register using your Government Gateway ID and have your UTR and National Insurance Number. Alternatively, you can also submit a paper form, which will be phased out as part of the Tax Digital rollout. For accuracy and efficiency, online is the best choice, whether you want to do so through HMRC’s portal or using any accounting software.

Sum Up Your Income

There must be detailed records of all taxable income, such as rent received from tenants and other sources of taxable income like capital gains and property disposals. When you do your self-assessment, you must report all your income, including what’s already taxed, like money from your job. One crucial point is that your taxable income is subject to income tax at the relevant tax rate, depending on your tax band.

Takeaway All Allowable Expenses

You can reduce all the allowable charges from taxable profit by reducing your tax liability. Allowable expenses are incurred wholly and exclusively to run your business efficiently. Here are some examples that landlords can claim tax relief on. This includes

• Agent Fee
• Accountant Fee
• Phone Calls
• Stationary
• Advertising for Tenants
• Travel Costs
• Running Cost (Maintenance and Repair)

Completion of Your Landlord Self-Assessment

The next step is to complete the self-assessment carefully. Check your file and landlord self-assessment tax return before the filing deadline, either online or using a paper form.

Sort out Your Tax Liability

HMRC will notify you with a tax bill confirming the amount that must be paid and settled with online payment methods. Online methods include telephone banking, debt or business credit card or at your bank.

Valuable Tips For Landlord Self-Assessment

Start the Process Early

Starting your landlord self-assessment early always pays off. So keep up all the required documentation and begin the process in good times. Starting late could result in a last-minute rush and may increase the chances of inaccuracies. It may also lead to missing payment deadlines, fines, and penalties.

Watch Out for Legislative Changes

The tax landscape is changing and aligning with new rules and laws. Being a landlord, you can fulfil your tax obligations. It is essential to look for legislative changes that affect you. Keeping abreast can help you remain as compliant and as efficient as possible.

Be Punctual with Bookkeeping

Being proactive and organised in bookkeeping can greatly benefit landlords with self-assessment. Keeping a precise and detailed record of business income and expenses and preventing a backlog will make it easier to complete your landlord self-assessment efficiently. Another benefit is that it will help you keep your business on top of your financial health.

Get Expert Assistance

You need expert guidance if you are still confused about your self-assessment or unsure about any aspects. With Lockhart Amin Accountants, you can get a plethora of knowledge regarding your self-assessment and free advice on how to stay compliant and tax-efficient.