Have you completed your self-assessment tax return?

Every year, landlords have to declare the amount of rental income they have received during the previous tax year, meaning that landlords must calculate and pay tax on all profits and capital gains from their rental property portfolio

Why is this important?

Although HM Revenue and Customs (HMRC) may not request a tax return, all landlords are required by law to file one. This rule applies even if the property is managed by someone else – a letting agent for instance. This is because the owner of the property is responsible for any tax declarations and payments.

The absence of key figures is not an excuse which will sit well with the tax collectors. It’s better to put in an estimate and make a note on the form that the figures will be supplied as soon as they are available. Remember, even if you have no tax to pay, you’ll still need to file a return to complete the self-assessment process or face a fine of at least £100.

How do you file a tax return?

To file a tax return, landlords can use HMRC’s free Self-Assessment Online service. Users will have to register for an online account before they can access this service, which takes at least 7 working days to set up.

Landlords can register for this online service by clicking here.

When does it have to be sorted?

All landlords must file their tax returns for the year by 31st January. Failure to do so will trigger an automatic fine of £100.

If you’re a new landlord and looking to file a tax return for the first time, then you must register for the online self-assessment service by 21st January at the latest.

What are the penalties?

Even if you have nothing to declare and no tax to pay, the penalties for filing late are high. Here is a breakdown:

Delay

Penalty

1 day late

Failure to complete your tax return will result in an automatic fine of £100. This applies even if you have no tax to pay or have already paid the tax you owe.

Up to 3 months late

In addition to the £100 you will be fined for filing a day late, you will also be charged £10 for each following day up to a maximum of £900.

Up to 6 months late

Depending on which is greater and on top of the penalties above, you will be fined £300 or 5% of the tax due.

Up to 12 months late

In addition to all the penalties mentioned above, HMRC may ask you to pay up to 100% of the tax due and the same amount, or more, as a further fine.

Read our disclaimer

Patrick Taylor

Written by: Patrick Taylor an Endsleigh colleague. 

Related articles

What are the Tax implications for my Rental Properties?

Paying tax is one of the inescapable costs for any business, and this includes your let property. However, there are many exemptions and allowances that could be applicable to your business that could make your investment all the more worthwhile.

Introduction to Tax Part 1: What is a self assessment tax return?

In the first of a new 3 part series on landlord tax, RITA4Rent begin by explaining what exactly is a self assessment tax return.

Introduction to Tax Part 2: What do I report on my self assessment tax return?

In the second of our 3 part series on landlord tax, RITA4Rent explore the different types of information which need to be reported to HM Revenue and Customs.

What are the different tenancy deposit schemes?

In England and Wales, landlords are obliged to place any deposit they receive (up to the value of £100,000 a year) in to a Government-authorised tenancy deposit scheme.

Universal Credit

Introduced in October 2013, Universal Credit is a new benefit that has started to replace the 6 existing benefits with a single monthly payment for people who are looking for work, or who are on a low income. Find out more.