Answers to questions we are most often asked by prospective Landlords about taxation on their rental income:
Any profit, after deducting all expenses and personal allowances, is taxable whether you are resident in the UK or overseas.
After deducting expenses from the annual rental income, the balance is taxable at your marginal rate. Tax deductible expenses include:
- Water rates paid during a tenancy (unless the tenant is paying them).
- Any ground rent or service charges paid during tenancy.
- Any advertising costs incurred in re-letting a property.
- All our fees.
- A wear and tear allowance of 10% of the rent, net of rates, if your property is let furnished.
- Any mortgage or loan interest paid on a qualifying mortgage.
We are legally obliged to inform the Inland Revenue of landlords for whom we act, if they request us to do so.
You will still be subject to tax on your profit. Subject to your tax status, you may have tax free allowances remaining unused. These can be used, in addition to the normal expenses, against your letting income to further reduce or eliminate your tax. You should ensure the most profitable split of letting income to maximize personal allowances and minimize the highest taxable income.
Execulets will prepare a statement of income and expenditure on your property for submission to the Inland Revenue. We will include all known expenditure which can be deducted against tax. If you are overseas, we can also request your mortgage lender to provide details of the interest paid on your loan, so that we can offset this against tax, if appropriate.
However, we do not have any information about your personal allowances or any bills you may pay directly which relate to the property.
It may, therefore, be in your interests to employ an accountant. If you do, we will be happy to provide them with all the information about your letting income they require