The 31st of January is the final date you can file a tax return if you earned rental income during the tax year 6th April 2017 to 5th April 2018, or if you operate your rentals business through a limited company, to the end of the previous company’s tax year.
If you use an accountant, it’s a busy time for them, dealing with last minute submissions, and some charge extra if you are on the last minute, so the sooner you get your accounts to them for filing the better.
If you are organised you will have your accounts system up-to-date, even if this is a simple spread sheet and a couple of lever arch files, one for receipts and one for expenditure. So it’s then easy for your accountant to deal with your affairs – the more organised you are with your accounting system, the more you will save on accountant’s bills.
Accounting for rental income is a fairly complex affair, given all the allowances and exemptions you can claim, and the restrictions on what you can claim for such things as mortgage interest relief, so unless you are confident you can navigate these complex rules, then a good accounts is well worth the fees.
Whether you have one or 100 buy-to-let properties, you still need to file, and while you are at it, disclose all your other forms of income. It’s an opportunity, with your accountant, if you use one, to review your financial plans for the future. Your life situation changes, and new legislation is constantly introduced, so you need to keep these plans under review.
Making Tax Digital
Making Tax Digital is the government’s revolutionary new scheme that requires online tax filing and payment, as well as digital record keeping – simple spread sheets will no longer do for this. All business taxes will be part of the scheme eventually, including the self-employed and buy-to-let landlords.
For some businesses it is less than a year away from the start of Making Tax Digital (MTD), a fundamental change in the way tax assessment and reporting is carried out in the UK. It will eventually affect everyone with income which falls outside the remit of employed income – PAYE.
The first raft of affected businesses will be those with a turnovers above the VAT threshold which is currently £85,000. These businesses will have to keep digital records in relation to their VAT compliance, with a start date of April 2019, and quarterly VAT returns will no longer apply.
Instead, owners must move to electronic uploads direct from their accounting software packages to the HMRC system. Accounting software providers with HMRC approved solutions will be able to supply suitable products, they are not supplied by HMRC.
For non-VAT registered sole-traders, partnerships, landlords and trading companies, the start date for MTD has yet to be confirmed following the successful roll out of Making Tax Digital for VAT, but the earliest this will occur is from April 2020.
Some useful taxation information:©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.