Landlords – just two weeks to file your Self Assessment tax return – keep calm!
Our friends at GoSimpleTax have some tips for members in this article:
You may be wishing that you had completed and filed your 2021/22 Self Assessment tax return weeks if not months ago.
But January has arrived and for whatever reason, you didn’t get it done. It’s a busy life and who enjoys doing tax returns? But don’t worry – you’re not alone. Each year, about four million people put off filing their Self Assessment tax return until after Christmas, despite the impending midnight 31 January online-filing deadline.
So, if you’re a busy landlord with other things to do and little time to spare, how do you get your 2021/22 Self Assessment tax return off your plate as quickly as possible with minimum fuss?
Are you registered for Self Assessment?
You must report your rental income via a Self Assessment tax return if it’s more than £2,500 after “allowable expenses” (more on these below) or £10,000 or more before allowable expenses have been deducted. To pay Income Tax on your rental income, if you didn’t file a tax return in the previous tax year, landlords must register for Self Assessment. It’s quick, easy and free!
Need to know! You must register for Self Assessment by 5 October latest in your second tax year (UK tax years run from 6 April to 5 April). If you haven’t done so by now, sorry, you’ll probably have to pay a fine.
● After registering online, within 10 days (21 if you live overseas), you’ll receive your Unique Taxpayer Reference (UTR) number through the post, which you’ll need to file your Self Assessment return.
● At this time of year, that wait could mean you miss the online filing deadline, which will result in a further £100 fine.
● You’ll also need a Government Gateway user ID and password to sign into your tax account to file your Self Assessment tax return. If you don’t have one, getting a user ID via GOV.uk is simple.
Decide how to file your landlord Self Assessment tax return online
There are three options. You can…
- Pay an accountant to do your Self Assessment tax return for you. However, it will probably cost you a couple of hundred quid and many accountants will already be fully booked up in January.
- File directly with HMRC via Government Gateway. There’s no cost, but there’s also nothing to stop you making mistakes within your tax return, errors that could later cost you time and money.
- Use Self Assessment commercial software (visit GOV.uk for popular options). If you’re an individual taxpayer with straightforward tax affairs, such software can cost less than £50 a year. It can save you lots of time and ensure that your Self Assessment tax return is mistake-free. It usually comes with user support and some providers offer additional paid-for tax return-checking services, for added peace of mind and possible tax savings.
How long will it take to fill out your landlord Self Assessment tax return?
● According to research from Which?, on average, it takes about two and a half hours to complete a Self Assessment tax return. And while more experienced people (about 20%) can get it done in under an hour, it takes as long as five hours for 10% of Self Assessment taxpayers. Some people do it in one session, while others do it in two or three.
The SA100 Self Assessment tax return and landlord supplementary pages
Within the Self Assessment tax return (the “SA100”, which is eight pages long), you provide details of taxable income and any capital gains, as well as (if applicable) student loan repayments, taxable bank or building society interest, pension payments/annuities, donations to charity and tax reliefs and allowances that you wish to claim.
As a UK landlord, you complete the main Self Assessment tax return (the SA100) as well as a supplementary page (SA105), summarising your taxable rental income and any associated costs you wish to claim.
If you earn taxable income from other sources, you’ll need to complete and file other supplementary pages, for example, the SA103 if you also earn taxable income from self-employment and/or the SA102 if you also earn income from employment or as a company director (see GOV.uk for the full list of Self Assessment tax return supplementary pages).
Self Assessment tax return allowable expenses for landlords
Landlords can claim for many costs arising from renting out their property. Such “allowable expenses” can include: property maintenance, repair and redecorating costs, gardening and cleaning, insurance, service charges, lettings agent and management fees, etc. You summarise your rental allowable expenses within your supplementary SA105 form.
If your rental property is furnished or part-furnished, you may be able to claim Replacement of Domestic Items Relief for replacing sofas, beds, carpets, curtains, white goods, sofas, crockery, cutlery, etc. See GOV.uk for more information on Replacement of Domestic Items Relief.
If you use something for rental income and personal reasons, for example, your mobile phone, you can only claim allowable expenses for the rental income-cost proportion. You’ll need to use a reliable method to work out how much to claim. You’ll also need to retain proof of such costs (HMRC can request this).
“Capital expenses” created by, for example, adding an extension, upgrading kitchen or bathroom, installing a burglar alarm if there wasn’t one previously, etc, are not allowable expenses. However, keep records of such costs because you may be able to offset them against Capital Gains Tax if you one day sell the property.
Need to know! You can’t claim allowable expenses if you claim the £1,000 tax-free property allowance, which is advised if your expenses are below £1,000 a year.
● Visit Gov.uk for government guidance on how to work out your rental income when you let property, which includes information about allowable expenses.
Completing your landlord Self Assessment tax return
Try to complete your Self Assessment tax return as soon as possible in January. The later you leave it, the closer the deadline will get, which could encourage you to rush completing your Self Assessment tax return. This makes mistakes more likely.
Take your time when completing your Self Assessment tax return. Give yourself enough time to get it done, in as few sessions as possible. Do it somewhere where there are no distractions, so you can concentrate on completing your Self Assessment tax return. If possible, don’t leave it too late in the day, when you’re likely to be more tired.
Top tip! Before you start to fill in your Self Assessment tax return – to help you get the job done quicker – have the following to hand:
● your ten-digit UTR
● your National Insurance number
● details of all your income from the tax year (eg income from self-employment, dividend payments, interest, etc)
● your P60 if you’ve also earned income from part-time or full-time employment
● summaries of rental costs you wish to claim as allowable expenses
● contributions to charity or pensions that qualify for tax relief (if applicable).
Having all of your rental income and costs already conveniently summarised in accounting software really will save you lots of time when filling in your Self Assessment tax return. Figures from accounting software can easily be imported into Self Assessment filing software. Alternatively, manually summarise all of your rental income and costs before you start to fill out your Self Assessment tax return. Double check to make sure that your figures are correct.
Need to know! If you file online but realise that you’ve made a mistake in your Self Assessment tax return, you’ll have to wait 72 hours, but you’ll then have up to 12 months to correct any errors.
What if you still miss the online filing deadline?
If you miss the midnight 31 January online filing deadline and don’t have a reasonable excuse, you’ll be charged a £100 penalty. Your fine will increase if you still haven’t filed your Self Assessment tax return after three months.
Income, Expenses and tax submission all in one. GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.
Our software submits directly to HMRC and is the digital solution for Landlords to record income, expenses and file their self-assessment giving hints on savings along the way.
Covering all self-assessment pages, not just property, GoSimpleTax does all the calculations for you saving you ££’s on accountancy fees.