Part 2 of the guide explored the types of income and expenditure landlords and property investors need to report via their self assessment tax returns. In this part, we explore the next stage. If you have ascertained that you need to complete a tax return, the next step is to register for self assessment with HM Revenue and Customs (HMRC), and confirm you are in receipt of rental income.
HMRC operate on what is referred to as a tax year basis; they do not work on a calendar year basis. A tax year runs from 6th April, up until the 5th April the following year.
You should register for self-assessment after the end of the tax year when you first began receiving rental income.
If your letting activities commenced in December 2014, you would need to report to HMRC your rental profits for the period from when letting started, up until 5th April 2015. This would be reported on your self assessment tax return for the 2014/15 tax year, due for filing by 31st January 2016. This first year would be a “part period” for your rental business; the next self assessment tax return you would prepare, the 2015/16 tax year, would therefore report on a full year’s rental income and expenditure, from the period from 6th April 2015 through to 5th April 2016.
If you need to register for self assessment, you are now able register online.
The registration form is simply a questionnaire which requires you to provide your basic credentials and reasons for registering. It will ask for your title, name, address, National Insurance number, telephone number, and your Unique Taxpayer Reference. With regards to the latter, this is only applicable if you have been registered for self assessment in the past. If this is not applicable to you, then this can just be ignored.
You will also be asked why you need to register for self assessment. As a landlord and property investor, you need to select the option named: “I have been getting income from land and property in the UK.” The date letting commenced also needs to be confirmed.
Once your self assessment registration has completed, HMRC will issue you with a Unique Taxpayer Reference (UTR) number. You can then register to complete your self assessment tax return online, or alternatively, you may opt to file your tax return in the traditional paper format.
Should you choose to use a tax advisor to look after your tax affairs, they will request an “authorising your agent” (64-8) form, which allows your advisors to deal with HMRC on your behalf. This also allows them to access your statements and PAYE coding notices. This form would be provided to you by your tax advisor.
When the tax year ends, the two main deadlines to remember are:
31 October – Final due date to file your tax return if filing via paper method.
31 January – Final due date to file your tax return if filing online.
Once you have filed your tax return, if there are any tax liabilities arising, these must also be paid by 31st January. It is of utmost importance not to miss the deadlines; the penalties for both late filing and payment are severe, and it is highly recommended not to leave matters until the last minute.
We hope this part of our tax feature helps landlords understand how they should register for self assessment, and clarifies the important filing dates to remember.
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