Tax NEW system
Landlords that want the HMRC to calculate their self assessment tax return now have less than a month to make the 31st October deadline.
The rest of us have a few more months to go before the 31st January deadline for online filing of our tax return.
Property Hawks Property Manager NEW tax features
I don’t know how landlords have compiled the information about their property portfolio in the past, but our Property Manager 3.0 software allows landlords to calculate all the figures for the UK property section of their self assessment tax return. The system allows landlords to see all the income and expenses that goes into the land and property tax return that we need to file with HMRC.
We’ve further developed the tax system to enable landlords to send all their UK property details direct to their accountant. As we speak our very own ‘Stig’ is under the bonnet tightening a few digital screws and tweaking the odd line of code.
We are also looking at ways that users of the Property Manager can submit their entire tax return direct to HMRC through downloadable tax software.
The first step for a landlord getting together their tax information is to add in the rents that they’ve received for each rental property. Open up the Property Manager, and update the rents received on your portfolio.
The new tax system allows landlords to elect between the cash accounting and accruals system. The revenue preferred standard is the accruals method, where income and expenses should be accounted for when they fall due – not when they are paid. They will allow by concession the cash accounting method to be used by small landlords where the rents are under £15,000.
Landlords will also need to add in their expenses incurred when running their buy-to-let business. With many landlords paying historically low interest rates on their buy-to-let mortgages, accounting in full for their expenses is more important than ever if a landlord is to avoid paying tax on their rental profits.
Remember the test that a landlord needs to apply when assessing whether they can include an item as an expense is whether it was “wholly and exclusively” incurred for the purposes of letting their property.
The other major expense that needs to be accounted for is the interest charges paid on any buy-to-let mortgages or finance used in connection with their rental business. Remember it’s only the interest and not the capital repayment that can be offset against any rental income. To add in your loan interest then go to Loan Interest set under the Financial tab.
TAX SAVING TIP
If you are using part of your house in connection with running your letting business, don’t forget that you can make a deduction for using part of your home as an office. If that is the case, landlords should make a minimum deduction of £104 because this is allowable by HMRC without them being able to ask for written evidence. Anything above this a landlord will have to potentially evidence. Don’t get greedy, business expenses should be in proportion to the size of a landlord’s letting business and the Revenue have guidelines as to this and anything above could prompt an enquiry. A landlord should apportion running costs based on floor area say to the use of a bedroom as an office. Costs that can be included: heating, lighting, finance, repairs costs.
So landlords have a look at our new tax calculating software. If you have any ideas about how it can be improved or added to do let us know. We can add them to ‘our Stig’s’ to do list whilst he’s got the bonnet up.