This tax guide explains everything about buy to let landlords. How to declare your rental income? How to register? What expenses can you claim? Is the online completion of a tax return challenging? How much tax will you have to pay? All these questions and more will be answered in this guide so that you can pay your taxes accurately and without any delay. This tax guide will help you out with all the basics so that you can get your tax affairs sorted and also file your self-assessment tax return without any worries.
Tax penalties were increased significantly last year. Hence, it has become more crucial than ever to file your tax return promptly as well as get it right the very first time. So, without further ado, let us begin!
The very first step comprises selecting the right form and registering with HMRC. If you are sure that you need to file a tax return, it is crucial to inform HMRC. You will be required to fill the SA1 form. You can carry out more HMRC registrations online on the official website. All the information you need to fill in this form is simple and straightforward, including your full name, address and date of birth. In addition to that, you will also require your National Insurance number. Alternatively, if you wish to use paper forms, you can find the address on the form itself where you must send it to them on completion. The registration needs to be completed by 5 October of the following the end of the tax year. For example, for tax year 6 April 2018 – 5 April 2019, you need to register with HMRC to pay taxes before 5 October 2019.
In case you are moving abroad but have decided to rent any UK property such as your old home, you must know that you still remain liable to tax on these rents. Moreover, you must also complete the self-assessment tax returns before the stipulated deadline. In the same vein, you must consider if you wish to register yourself for the Non-Resident Landlords’ Scheme. In case you fail to register, your letting agent or tenant shall deduct tax from the total rent that you are due to receive. Then, you can claim for this tax to be offset against any tax that is owed on your tax return.
Once you are done with the registration, you will receive a confirmation from HMRC along with your UTR or Unique Taxpayers Reference. This unique reference represents all your tax affairs. You will be required to quote it on the payments or correspondence you make with HMRC. Moreover, they might also ask for your National Insurance number in case you call them with a query or clarifications.
It is important to remember that a tax return must disclose your taxable gains and income for a specific taxation year starting on April 6th and ending on April 5th. Also, all your taxable gains and income should be declared on your tax return. This holds true even if you received them from before they were taxed (taxed at source) like bank interest or employment income.
Following the tax year-end, you must submit the returns to HMRC. It is possible to submit the return on paper by October 31st. Alternatively, you can also file your return online, the deadline for which is January 31st at the end of the taxation year. If you fail to file your tax return in a timely manner, you will have to pay an automatic penalty of £100. There might also be additional fines according to the length of the delay.
All the tax that you owe should be paid by January 31st by the end of each taxation year. You can pay HMRC in a number of ways such as Bank Giro, Online Banking, Direct Debit and much more. As discussed above, you still need to declare the already taxed income on your tax return. That said, the tax that has already been paid at source shall be deducted before it arrives at the final version of the tax bill. Note that in case not a lot of your tax has been collected at source or your total tax liability is more than £1,000, you might also have to make a tax instalment for the next year on January 31st. If you delay paying HMRC, again, it could cost you late penalty payments and interest.
It can be rather intimidating to attempt to complete a self-assessment tax return by yourself. Moreover, it is a rather time-consuming process with a lot of loopholes to consider. This is precisely where we can help you out. We can help you prepare as well as file your tax return without any fuss. All you have to do is share the information we request, sit back and relax. We’ll take care of it for you!