5 things landlords need to know

1. Keep on top of your records

Keeping reliable records of income and expenses is key. It'll allow you to monitor how your property business is performing. With cloud software, you can update accounting records from anywhere, even on your mobile phone. This means that you can monitor your profits and track expenses to ensure the business thrives. 

Reliable records also enables your accountant to correctly prepare your tax return and claim all allowable expenses against income.  

2. Stay up to date with the tax rules

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) comes in to force from April 2026. Landlords earning over £50,000 from property must keep digital records and send quarterly reports to HM Revenue & Customs (HMRC). Landlords with property income exceeding £30,000 will need to meet Making Tax Digital requirements from April 2027. 

Stay informed of changes to other rules. Knowing what expenses are deductible is imperative. Your accountant will be able to help you decide what costs are allowable. In general, costs must be wholly and exclusively related to the business. 

Before you rent out a property you may incur some costs that relate to the property business. For example, getting gas safety certificates and an energy performance check (EPC). These costs will be deductible on your tax return provided they meet the required criteria. Fees incurred acquiring the property i.e. surveyor fees are not deductible expenses. 

3. Think about your business structure

Most properties are owned by individuals, some landlords prefer to hold properties through a company. There may be tax benefits to this arrangement but that is not always the case so it's important to seek financial advice. Always plan and discuss changes in business structure with your accountant. They can work with you to build a long-term plan in connection with your business goals. 

4. Maximise family allowances

Depending on your circumstances, owning a property with a spouse of civil partner that you live with may be tax efficient. You may identify tax efficiencies by utilising the spouse's personal allowance and basic rate tax band. Get the transfer of the property handled correctly and discuss tax planning opportunities with your accountant. 

Report property disposals correctly

UK residents disposing of UK residential property must pay and report Capital Gains Tax (CGT) by 60 days of completion. Non-UK residents who dispose of UK land and property must report the disposal to HMRC regardless of whether there is tax to pay or not and also have 60 days from completion to report this to HMRC. 

Keeping the following will be useful when you sell the property for Capital Gains Tax (CGT) purposes: 

• a log of capital expenditure 
• evidence of purchase price and surveyor 
• evidence of estate agent and legal fees 
• provide key dates, such as the period you lived in the property, the duration it was rented out, and the time it remained empty 

How can we help?

At TaxAssist Accountant we help many landlords in the same situation as you. We would love to speak to you to help you with your property business. Call us today on 01535 322795 or fill out our online enquiry form to arrange a free initial consultation.

Last updated: 11th December 2023