A Guide to Landlord Self-Assessment

It’s not hyperbole to say that the landlord sector can be turbulent. Legislative changes continue to cause concern for landlords with the Renters Reform Bill working its way through Parliament with Royal Assent expected towards the end of 2024.

The Renters Reform Bill will, to an extent, shift the balance of power towards tenants and will potentially cause a headache for landlords in certain scenarios. This piece of legislation will introduce sweeping change to the landlord sector including applying the Decent Homes Standard, an increased notice period to inform tenants should landlords wish to raise rents as well as introducing a new landlord ombudsman scheme.

2024 also marks the last full year of lower Stamp Duty with the residential nil-rate tax threshold expected to decrease from £250,000 to £125,000 in March 2025 which will negatively impact landlords disposing of property.

And that’s before we get to the day-to-day grind of running a property rental business. If you’re a hands-on landlord your day to day could be very busy. Perhaps you’ll be dealing with problem tenants, chasing rent, maintaining your portfolio and ensuring adherence to ever-tightening building and environmental regulations.

As well as this, you have responsibility of ensuring compliance with your reporting and tax obligations, and that includes reporting your rental income and expenses to HM Revenue & Customs (HMRC) when you complete your annual landlord self-assessment tax return if your annual rental income is more than £1,000. The first £1,000 of rental income is tax-free, this is known as the property allowance.

In this post we’ll cover the nuances of landlord self-assessment with some hints and advice and how Gorilla Accounting can help with both your self-assessment tax return and landlord accounting needs.

What is Landlord Self-Assessment?

Landlord self-assessment is the way in which landlords declare both their rental income and any expenses incurred as a result of running their business to HMRC to ascertain their tax liability each tax year.

The Process for Landlord Self-Assessment

Register for Self-Assessment with HMRC

As a landlord in receipt of rental income you must complete and submit your annual landlord self-assessment to HMRC. To do this online you must register using your Government Gateway ID and have your Unique Taxpayer Reference (UTR) number and National Insurance Number to hand. Alternatively you can submit a paper form but this will be phased out as part of the Making Tax Digital rollout. In terms of accuracy and efficiency, filing online is the better option, whether that’s through HMRC’s portal or using accounting software.

Total Up Your Income

You must maintain organised and detailed records of all taxable income such as rent received from your tenants and any other sources of taxable income such as capital gains from disposing of property This includes those taxed at source such as income from employment as a self-assessment must include all sources of income. Your taxable income is subject to income tax at the relevant tax rate depending which tax band you’re in.

Deduct Your Allowable Expenses

You can deduct certain allowable expenses from your taxable profit which reduces your overall tax liability. Allowable expenses are expenses incurred wholly and exclusively for the purposes of running your business. Examples of allowable expenses that landlords can claim tax relief on include letting agent fees, accountant fees, phone calls, stationery, advertising for tenants, travel costs and running costs such as maintenance & repairs.

Complete Your Landlord Self-Assessment

The next step is to accurately and carefully complete, check and file your landlord self-assessment tax return before the filing deadline, either online or using a paper form.

Settle Your Tax Liability

HMRC will send you a tax bill confirming the amount that must be paid which can then be settled with various payment methods available including online or telephone banking, debit or business credit card or at your bank or building society.

Landlord Self-Assessment Hints and Tips

Start It Early

It always pays to start your landlord self-assessment early so collate all the required documentation and start the process in good time. Starting late could result in a last minute rush which increases the chances of errors or inaccuracies or missing the filing or payment deadlines which can all land you with fines and penalties from HMRC.

Keep an Eye Out for Legislative Changes

The tax landscape is dynamic with regular changes to the laws and regulations. As a landlord you have the responsibility of fulfilling your tax obligations so its important to keep abreast of any legislative changes that might affect you to ensure that you remain compliant and are operating as tax-efficiently as possible.

Be Fastidious With Bookkeeping

Being proactive, meticulous and organised with your bookkeeping can only be of benefit in respect of your landlord self-assessment. Keeping detailed records of business income and expenditure and preventing a backlog will make it much easier to complete your landlord self-assessment efficiently and accurately. An added benefit is that it also helps you to keep on top of the financial health of your business.

Get Professional Support

If you’re struggling with your landlord self-assessment, are unsure about any aspect of it, or even if you don’t have the time to complete it, it’s a good idea to engage a professional, such as ourselves, to help.

Landlord Self-Assessment with Gorilla Accounting

As the UK’s most trusted accountants, we are on hand if you need any help with your landlord self-assessment. Starting from only £200 + VAT, our self-assessment tax return service will ensure that your tax return is completed accurately, efficiently and on time. Complete our Personal Tax Questionnaire today to start the process.

And if you’re a Gorilla Accounting client, completion of your annual landlord self-assessment is included as part of our landlord accounting service. On top of that, all your business and personal accounting needs will be expertly managed. With great value tiered fees based on your portfolio size, you will receive unlimited support and advice from your own dedicated accountant. A same day turnaround on your queries is guaranteed thanks to our Client Service Guarantee and you receive full access to FreeAgent cloud accounting software.

Our landlord accounting service eases the pressure, giving you peace of mind that your accounting and tax obligations are in expert hands allowing you to fully focus on the day to day running of your property business and expanding your portfolio. Call us on 0330 024 0406 or request a callback if you have any queries about our accounting service or your landlord self-assessment.