Self Assessment for Landlords

As a landlord who owns or has invested in property, the profit you make on rent is added to your other earnings, such as a salary from another job, and taxed accordingly.

You should complete a landlord Self Assessment (SA105) if the rental income on your property is:

• Over £1,000 in a tax year

In a Self Assessment return, you will need to report the following types of income, if applicable:

• Employment income and PAYE deductions.
• Employment benefits such as medical insurance, fuel and travel benefits, etc.
• Casual earnings.
• Pension contributions or income.
• Rent from your properties.
• Interest or dividends earned through your bank or building society.
• Trust, investment, or foreign incomes.
• Child benefits or other taxable state benefits such as jobseekers allowance.

The deadline for submitting a Self Assessment tax return depends on whether you file electronically or via paper. The annual deadline for an online Self Assessment tax return is the 31st of January every year, however, if you submit a paper Self Assessment tax return then the deadline is the 31st of October the year before.

There are a number of penalties applied depending on how late you submit either of these Self Assessment tax returns. These are as follows:

• 30 days late = 5% of the tax due
• 6 months late = 5% of the tax due on that date
• 12 months late = 5% of the tax due on that date

There are a few exceptions to the Self Assessment tax return penalties depending on a few extreme circumstances. For instance, you may be able to avoid paying late-payment penalties if a close relative died shortly before your tax deadline, if you were seriously ill and unable to complete a tax return, or if you were experiencing severe IT issues, or if there were any known issues related to HMRC’s online services at the time. Each of these circumstances will require evidence to substantiate your claim.

There are a number of allowable expenses you can claim as a landlord, but each of these must come “wholly and exclusively” from renting out your properties. Some of these expenses may also cross over into your personal life, for instance, the cost of using your mobile phone to make calls related to the rental of your property. In these instances, you must calculate the percentage of costs related to the business use of your mobile phone.

Allowable expenses must be detailed in your Self Assessment tax return, along with your income from rent and all other sources of taxable income. Once this has been calculated, you will inform HMRC how much income tax you owe.

Allowable expenses that landlords can claim on their Self Assessment include:

• Property maintenance and repairs.
• Service charges and ground rent.
• Insurance such as building and contents insurance.
• Redecorating between tenant occupations.
• Cleaning costs and gardening.
• Utility bills such as water, council tax, gas and electricity (applicable if you pay these bills, not the tenant).
• Letting agent fees.
• Legal fees such as pursuing unpaid rent.
• Accountancy and bookkeeping.
• Costs for advertising and making calls to new and existing tenants.
• Fuel costs related to the rental business.
• Disposal costs for old furniture, appliances, items left by old tenants.

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