Tax Advice

The tax system operating in the UK is known as “self-assessment”. Under this system, certain taxpayers must calculate their annual tax liability and tell the Inland Revenue what they are required to pay. There are strict time limits by which they must do this.

Who must self-assess?

Not everybody liable to UK tax must file a self-assessment return. Generally, only those taxpayers who have untaxed sources of income need do so. Most people pay tax at source, for example under PAYE and so have nothing further to pay.

What about landlords?

Landlords must report their annual profit or loss from property letting each year. This is because rents are not generally subject to deduction of tax at source. Even landlords who have not made a profit must make a return, in order to keep a record of their losses going forward.

What if I am not resident in the UK?

Non-resident landlords must submit UK income tax returns and pay UK tax on any rental profits. This is because most tax treaties give the primary taxing right on income from property letting to the country in which the property is situated. If it’s UK property, you pay UK tax.

What if I am not resident and simply don’t pay?

UK law requires that tax from rents paid to non-resident landlords must have tax deducted from it first. If this deduction is to be avoided, you must obtain authority from HM Revenue & Customs and this will only be granted if your tax affairs are completely up to date.

What if I sell the property?

If you sell a property you will generally be subject to capital gains tax on any profit that you make. This is a complex area of tax and you should seek appropriate professional advice.

When must a return be filed?

Self-assessment returns must be made to the Inland Revenue no later than 31st January following the end of a year of assessment. For example, the return for the year ended 5th April 2005 must be submitted no later than 31st January 2006.

When must I pay any tax due?

The self-assessment system requires that two equal payments on account of an individual’s liability are made, with a balancing of their tax account later in the year. Whether or not you have to make these payments is determined by your own circumstances and you should seek appropriate professional advice.

Who do we recommend?

The Taxation Consultancy is a tax practice based in Caterham serving clients in London and the Home Counties. They provide a friendly, affordable, service to landlords on all aspects of taxation and accounts. A fixed fee can be agreed in advance so that you won't suddenly find an additional charge for VAT or extras.

Please contact Carl Barwick for further information