Landlords: Self-employed/ Limited co

For landlords, the tax return process involves several key considerations:

Rental Income Taxation

Rental income from UK property is subject to UK tax, regardless of the landlord's residency status. This applies to both income tax and corporation tax for non-resident companies PIM4810 - Summary Of The Non-Resident Landlord Scheme.

Non-Resident Landlords Scheme (NRLS):

Non-resident landlords (NRLs) must comply with the NRLS, which mandates that tax be deducted at source from rental income unless the landlord has received HMRC approval to receive rent gross PIM4810 - Summary Of The Non-Resident Landlord Scheme, B6.217 Non-resident landlords.

From 6 April 2020, non-UK resident companies are chargeable to corporation tax rather than income tax on profits from a UK property business B6.217 Non-resident landlords.

Deductions and Allowances:

Landlords can deduct allowable expenses from their rental income to arrive at the taxable amount. These expenses include maintenance, repairs, and certain financing costs Non-resident landlords ― choice of acquisition vehicle.

The wear and tear allowance, applicable for furnished residential lettings, was 10% of the relevant rental amount for the years 2011-12 to 2015-16 PIM3215 Wear & Tear Allowance: 2011-12 To 2015-16.

Capital Gains Tax

If a landlord receives a premium for the grant of a short lease (50 years or less), part of that premium is chargeable to income tax as property income, and the remainder is chargeable to capital gains tax Assignment and grant of leases for capital gains tax.

Gross Payment Status

Non-resident landlords can apply to HMRC to receive rental income without tax deducted at source. If approved, HMRC will authorize the landlord’s letting agent or tenant to pay rent gross PIM4870 - HMRC Authorisation To Receive Rent Gross.

Interest Deductibility

From 6 April 2020, non-resident companies are subject to corporation tax rules on the deductibility of interest payments related to a UK property business. Interest is deductible if it is incurred wholly and exclusively for the business and is not excessive Non-resident landlords ― choice of acquisition vehicle.

Landlords are required to follow specific tax return processes and deadlines.

Self-Assessment Tax Returns

Landlords must file their self-assessment tax returns by 31 January following the end of the tax year. For example, for the 2024/25 tax year, the deadline is 31 January 2026. If a paper return is filed, the deadline is 31 October following the end of the tax year Payment of tax due under self-assessment, A6.401 Key self-assessment return dates and the enquiry window.

If a landlord disposes of residential UK property, they must make a payment of capital gains tax within 60 days of completion Payment of tax due under self-assessment.

Payment of Tax

Any outstanding income tax, Class 4 national insurance, and capital gains tax must be paid by 31 January following the end of the tax year. Missing this deadline can result in interest and penalties Payment of tax due under self-assessment.

From 6 April 2024, the mandatory requirement to pay Class 2 national insurance contributions is removed Payment of tax due under self-assessment.

Relief for Finance Costs

From April 2017, relief for finance costs related to residential property is restricted to the basic rate of income tax. This applies to individuals, trustees, and personal representatives, but not to non-resident companies unless they act in a fiduciary or representative capacity Property partnerships.

Penalties and Compliance

If a landlord fails to notify their landlord of a self-supply charge, the landlord is still liable for any tax due on the rents. However, the tenant's failure to notify is considered a reasonable excuse for penalties unless there is evidence of collusion or manipulation VCP10792 Self Supply Charge - Development Leases