Landlord Tax
Apart from our business clients, our largest number of personal tax clients are Buy To Let Landlords.
This group of clients represents over a third of our personal tax cases. Recent law changes in Landlord Tax such as restrictions on mortgage interest deductions and flat rate deductions have changed the landscape of property taxes.
When it comes to selling properties, the new capital gains tax reporting requirements have made this a specialist area for us. Now when a property is sold a capital gains tax return is required within 60 days of receipt of disposal proceeds. HMRC has decided to treat this as a totally separate tax system, so we are unable to use our in-house proprietary software and are forced to load data onto an HMRC portal.
The bulk of the work revolves around setup and is both time-consuming and specific in terms of requirements.
We provide landlord tax services from our offices in Bath, Midsomer Norton, and Warminster,, covering clients across Somerset, Wiltshire, and the surrounding area.
With one of the UK's busiest rental markets on our doorstep, our accountants serving Bath work with landlords across the city and surrounding villages.
Who this is for
You might own one flat in Oldfield Park that used to be your home. You might have built up eight properties across Bath, Frome and Trowbridge over twenty years. You might have inherited a house and have no idea what happens next. All three are landlord tax, and all three are conversations we have most weeks.
What they have in common is that the tax rarely sits still. The finance cost restriction changed what a mortgage is worth against your income. Making Tax Digital changes how and when you report. Capital gains rules change what you keep when you sell. Getting it wrong is expensive and getting it right is mostly a matter of planning early rather than filing late.
What we handle
- Rental income and allowable expenses, so you claim what you are entitled to and nothing you are not
- The finance cost restriction and how it affects your actual tax bill
- Furnished holiday lettings and how they differ from a standard let
- Jointly owned property and how income is split between owners
- Capital gains on sale, including the reliefs that apply when a property was once your home
- Inheritance tax planning where property is the main asset, alongside our inheritance tax factsheet
- Making Tax Digital for landlords, including quarterly filings once they apply to you
- Self assessment returns that pull all of it together, through our taxation service
Working with us
The first call is free and so is the first meeting. After that we quote a fixed price before we start, so you know the cost of the return before you commit to it. We are chartered accountants, we explain things in plain English, and we will tell you when something is not worth doing.
We work with landlords across Bath, Midsomer Norton, Warminster, Frome, Trowbridge and Radstock. Call your nearest office: Midsomer Norton 01761 410444, Warminster 01985 213130, Bath 01225 422183.
We're here to help!
Feel free to get in touch with us any time.
A Landlord Tax story
A couple were quite happily completing their annual Self Assessment Returns themselves but came completely unstuck when faced with a residential property sale. They approached us for assistance and were so pleased with the service they now ask us to prepare their Self Assessments as well, knowing the work will be completed effectively and giving them the peace of mind the returns are filed on time and correct.
Frequently asked questions on Landlord tax
What is landlord tax, and who needs to pay it?
Landlord tax refers to the taxes landlords must pay on income earned from renting out property. If you own a property and generate rental income, you are required to declare it through a Self Assessment tax return and pay tax accordingly. This includes buy-to-let landlords, holiday let owners, and those renting out additional properties.
What expenses can landlords deduct when calculating taxable rental income?
Landlords can deduct allowable expenses such as maintenance and repairs, property management fees, council tax, mortgage interest (under specific rules like the mortgage interest tax relief cap), landlord insurance, and utility costs. These deductions can significantly reduce your taxable income.
Do landlords need to pay capital gains tax (CGT) when selling a rental property?
Yes, landlords may need to pay capital gains tax when they sell a buy-to-let or rental property. The tax applies to the profit made from the sale, and rates depend on your income bracket. Seeking expert landlord tax advice can help you explore reliefs like Private Residence Relief or Lettings Relief.
How is rental income taxed in the UK?
Rental income is added to your total yearly income and taxed according to your tax band. Basic rate taxpayers typically pay 20%, higher-rate taxpayers pay 40%, and additional-rate taxpayers pay 45% on rental profits. Using a professional landlord tax service can ensure correct calculations and compliance.
What are the tax implications of owning a holiday let property?
Furnished Holiday Lettings (FHLs) have distinct tax rules compared to standard buy-to-lets. They may qualify for special reliefs, such as capital allowances and Business Rate relief, but specific criteria must be met. Expert guidance is essential to understand the tax benefits and compliance requirements.
How can landlords reduce their tax liability?
Landlords can reduce their tax liability by claiming allowable expenses, making use of tax reliefs (e.g., mortgage interest relief), and restructuring property ownership (e.g., through a limited company). Consulting a landlord tax expert can ensure you maximise deductions legally and efficiently.
Do I need to declare rental income if I live abroad?
Yes, non-resident landlords must declare and pay UK tax on rental income earned from UK properties. You may register with the Non-Resident Landlord Scheme (NRLS) to receive rental income without tax deductions at source, but you will still need to file a Self Assessment tax return.
How does forming a limited company affect landlord tax?
Owning rental properties through a limited company can reduce personal tax liability, as profits are taxed at the corporate tax rate, which is lower than higher-rate personal income tax. However, transferring properties into a company has upfront costs like stamp duty and capital gains tax.
What is the deadline for declaring rental income to HMRC?
You must declare rental income by completing a Self Assessment tax return. The deadline for online submissions is 31 January following the tax year-end, while paper returns are due by 31 October. Late submissions or payments may incur penalties and interest.
Can I get help managing my landlord tax obligations?
Yes, pgtax.co.uk specialises in landlord tax services, offering tailored advice and assistance with Self Assessment tax returns, expense management, tax planning, and compliance. Our experts simplify your landlord tax obligations and help you maximise tax efficiency.