Are you thinking about going into the rental market? Do you already have a portfolio of properties that you are letting? Are you letting a room out in your home? Either way, it’s worth checking out this new government guide which is a one-stop shop where you will find all the information you need, and what’s more it’s ‘straight from the horse’s mouth’.
HMRC have recently introduced a new e-learning guide to ‘letting out property’ which can be found on their website, and offers a simplified and concise self-study course on everything from start to finish. The course can be read in around an hour if you wish to skim through it, or you can choose to read it in smaller chunks over a longer period… it’s entirely up to you.
To help you, they have written the guide in 5 short sections:
- My property income
- What do I need to do for HMRC?
- Working out my profit or loss
- What happens when I stop letting out a property or sell it?
My property income
The first section provides some excellent guidelines for anyone who receives any sort of income through any rental of property, from the householder who wants to rent out their spare room, right through to a business that deals with overseas property rentals. Any tax implications and exemptions are also discussed in this section. It’s easy to follow and you will find many useful links to other websites and sources of information.
What do I need to do for HMRC?
The next section focuses on the payment of tax and how to make sure you are abiding by the government rules regarding ‘self- assessment’. It will help you to decide whether online tax returns or paper returns are more suited to you. You will also find simple guidance on what records and documents landlords need to keep. The guide is clear and concise, and easy to follow. It’s straight to the point and there’s no ambiguity.
Working out my profit and loss
Moving on, the third section is packed with information about what exactly you should be paying tax on, allowable expenses and what counts as a rentable income. It also explains how to work out your profit and loss, and what to do if a property has joint ownership.
The expenses section offers a detailed analysis of what expenses are allowable. This includes clarification in the following areas: Maintenance and repairs of property; repairs carried out prior to letting; mortgages and other financial costs; vehicle running costs; any legal and professional costs; gas, electricity, water rates, council tax and ground rent; property insurance and any other expenses that may be allowable. There is a full page on capital expenditure, including useful links, plus rules on claiming for expenses such as ‘wear and tear’ allowance.
What happens when I stop letting out a property or sell it?
If you ever decide to stop renting property, this section clarifies exactly what you need to do. There is information about ‘capital gains tax’ and in what circumstances it must be paid, plus guidelines on what to do if the property in question is jointly owned.
The final section has some very useful weblinks where you will find information about the guidelines for Scotland and Wales, amongst other things.
We would fully recommend that you have a good look through this guide to familiarise yourself with the latest rules, whether you are just starting out in the rentals business or have been letting property for years. It does no harm to keep up to date with the latest government legislation, after all, ignorance is not an excuse in court! Click on the link below to start the course.
We hope you have found this article useful and we would love to hear from you if you have any questions or thoughts…
Drop us an email at firstname.lastname@example.org or give us a call on 01379 650680.