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

In part 1, we looked at why you need to register to complete self assessment tax returns.  In this part, we explore the different types of information which need to be reported to HM Revenue and Customs. 

Your self assessment tax return reports all sources of taxable income, and relevant expenditure where applicable.

Typical types of income which you may need to report under self assessment on your tax return include the following:

Income

  • Employment income, PAYE deductions and benefits received
  • Casual earnings
  • Income from pensions
  • Income from property
  • Bank interest received, dividends received, and other investment and trust income.
  • Self-employment income
  • Foreign income
  • Child benefit, and certain other state benefits, jobseeker’s allowance being one such example

Capital Gains

Full details relating to any property sales and/or stocks, shares, unit trusts disposals.

Outgoings

  • Gift aid donations
  • Pension contributions
  • Student loan repayments
  • Rental property expenditure
  • Self-employment expenses

It is important to make clear that you are taxed on you property profits, not income.  Your profit is ascertained by deducting relevant allowable expenses  from the rental income you receive.  

If you receive taxable profits greater than £2,500, or if your rental income before deducting expenses is greater than £10,000, most landlords and property investors will need to report this information via their self assessment tax return.  Within this self assessment tax return, there are supplementary pages which need to be filled in.  As a landlord, you would need to complete the 2 pages named “UK Property.”  Should the property be owned jointly (perhaps with your husband/wife/partner), then you would report your relevant share of the property income and expenditure on your own separate tax return. The joint owner would report their share of the property income and expenditure separately. 

Your self assessment tax return should therefore include all your taxable income, not just rental income and expenditure.  Once this has been completed, should a shortfall of tax arise, then a payment should be made to HMRC by the relevant deadline.  If however, you have paid too much tax, then a refund can be requested.

One other common misconception is that if you are employed, then any rental profits below £2,500 are not subject to tax. It is important to note that this is not the case - the profits still need to be reported. However, there may be the option under certain conditions, for the profit to be reported by other means to HMRC, and any necessary tax collected via a PAYE coding notice.

To conclude, it is important to note that as well as reporting your rental profits via your self assessment tax return, you must report all other sources of income.  The next part of this feature, will explore how you can register for self assessment, and provide an overview of the dates to remember.  

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RITA4Rent are specialists in landlord and property tax, from simple tax returns through to detailed specialist advice, multi-property portfolios and limited company services. We are the only landlord property tax service recommended by the Residential Landlords Association, trusted by over 18,500 members. Contact RITA today on 0800 122 33 57 or by email clients@rita4rent.co.uk.

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