The UK tax system taxes -

  1. rents arising from UK property, wherever the owner is tax resident

  2. rental income arising anywhere in the world when owned by a UK tax resident person

If you are living outside the UK and you receive rents from a UK property then your tenant or letting agent will deduct tax from the rent received. If you are UK tax resident then you can receive your rents without deduction of tax.

For overseas landlords, your rental agent can usually arrange with the HMRC to have rents paid without deduction of tax.

All tax due in respect of rents will be paid under the self assessment system. See our page on Self Assessment for full details.

You will need to complete the Land and Property supplement of your self assessment tax return.

If you make a loss on your rents, you can carry the loss forward to subsequent years and set it against future rental profits.

There are special rules for furnished holiday lettings and these have changed in recent years. Please contact us for details.

From gross rents received you can deduct certain expenses to arrive at a net profit. This net profit is then charged to tax. The rules for calculating the allowable expenses are complex but generally, the net profit is taxed as if it were a business. A summary of the allowable expenses is shown below.

  1. Business rates, Council Tax, water rates, ground rates and insurance

  1. Repairs that prevent the property from deteriorating

  2. Finance charges including mortgage interest

  3. Management fees relating to the ongoing costs of letting

  4. Professional fees in drawing up accounts

  5. The cost of providing services e.g. gardening or cleaning

  6. Any expenses incurred wholly and exclusively for the purpose of your rental business e.g. advertising for tenants, stationery and telephone calls.

Revenue & Customs have devised a special scheme for people who let a room in their home. It is called the Rent a Room Scheme.

Under this scheme you will not be taxed on your first £4,250 (for 2015/16) of gross income (that is income including any sums you may receive for providing services) from letting furnished accommodation in your only or main home.

There are various rules relating to the Rent a Room Scheme and you should seek professional advice to determine whether you qualify.

UK Rental Income

What rents are liable to UK tax?

Will tax be deducted from my rent income?

How do I pay tax on my rent income?

What if I make a loss?

What happens if I let a room in my home?

How is the tax liability on rent income calculated?

Self AssessmentSelf_Assessment.html
Capital Gains taxCapital_Gains_Tax.html
Self EmploymentSelf_Employment.html
Limited CompaniesLimited_Companies.html

"Buy land. They’re not making it any more."

Mark Twain

More information.......

Landlords Under Enquiry By HMRC

HMRC are to target property owners who have not declared the correct tax by offering a new tax 'amnesty' campaign aimed at undeclared rental income.

HMRC are looking at landlords who own properties and let them on a variety of different basis including long-term letting, holiday lets, student lets and workforce lets.

This HMRC campaign will last 18 months and taxpayers can come forward at any point with a disclosure of their undeclared income from rented properties.

HMRC have a wealth of intelligence information to identify landlords who have either not declared any rents or are not declaring all rents received.  This can be from a number of sources including computerised records from other government agencies and local authorities, freely available information from the internet and information gathered from HMRC surveillance or tip-offs from the public.  Disgruntled tenants can be a good source of information to HMRC!

Lower penalties can be negotiated for those who come forward as part of the campaign.  Those who do not come forward can expect higher levels of penalties should HMRC later catch up with them and in certain cases criminal prosecutions can also occur.

HMRC's own estimate is that 1.5 million landlords underpay tax totalling £500m every year.

Tax InvestigationsTax_Investigations.html
VAT Short GuideVAT.html

Are you an overseas landlord with UK property?

We can complete and file your UK tax return for you with all tax calculations taken care of.

We can agree a fixed fee in advance.

Contact us for details

Brexit UpdateBrexit.html