OnTax Accountants In Dunfermline Discuss:

HMRC will tell you that if your rental profits are below £2500 then you may not need to submit a tax return. This is not entirely correct as you could be losing out by doing so. OnTax Accountants In Dunfermline have seen many examples of issues occurring when landlords rely on this detail alone.

For a more accurate answer, bring your data to us and we will ensure you end up in the best possible position.

Generally speaking, as soon as you start to rent the property! You should  inform them of your rental income right from the beginning so they can send you a self assessment form at the appropriate time.

Also, any initial losses need to be registered with HMRC so that they can be offset against later rental property gains.

OnTax Accountants In Dunfermline can assist you in this.

Generally speaking, a UK tax return will still be required to be submitted to HMRC. This is because foreign property rental income is subject to UK tax when brought into the UK.

There are some good tax breaks on foreign rental properties as they are treated differently to UK rental properties.

Yes, all incomes need to be declared to HMRC. Even if you make a loss during the year this still needs to be declared to HMRC so that the loss can be used up against future years profits thus reducing your tax bill.

HMRC will tell you "Whether you need to fill in a tax return will depend on the total rents you get and the profit you make. It will also depend on any other income you’ve had or may get, for example, from employment or pensions", however in our opinion submitting a return is always best.

The most common types of expenses you can deduct are:

• Maintenance and repairs to the property (but not improvements)
• Water rates, council tax, gas and electricity
• Interest on a mortgage to buy the property
• Contents insurance
• Costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
• Letting agents' fees
• Legal fees for lets of a year or less, or for renewing a lease of less than 50 years
• Direct costs such as phone calls, stationery and advertising for new tenants
• Accountant’s fees
• Rents, ground rents and service charges

Lettings agents are required by law to report rental incomes of their clients to HMRC, therefore if you use a letting agent then it is assured that HMRC already know about your property letting.

Also, HMRC control the land registry, so will know the addresses of all properties registered to you. Our advice is dont dodge the taxman, come and speak to us today, we will help you sort it all out!

The costs associated with the acquisition of the property are treated as part of the acquisition cost, this means they dont form part of the trading, or renting.

As such, neither can they be offset against trading gains. Instead, a note of these amounts is kept on file and offset against the gain when the property is sold. Any remaining gain is then subject to Capital Gains Tax after allowing for the annual personal exemption.

In order to arrive at the tax amount due, the original cost of the property plus all relevant capitalised expenses (i.e legal fees, renovation costs etc) are added up.

This amount is then compared to the selling price and selling fees to arrive at a "capital gain".

Any amount that is over and above the annual exemption of CGT is then subject to tax.

Yes you can. However, whether this is capitalised (for offsetting against the gain on sale at a later date) or is immediately offset against rental profits is a matter of decision for both you and your accountant.

If you rent a property to a connected person then HMRC may enquire as to whether the rent is at the commercial going rate.

If it falls below this rate then HMRC may decide to restrict your allowable expenses with a subsequent impact on the amount of tax you will pay.