How to report RENTAL INCOME on the self assessment tax return 23/24 -Tutorial

[@dkaradia]

Thank you. My accountant put up their fees and I felt left in the lurch. This broke it down in an easy to follow way and I was able to submit it myself.

[@James-sh4zf]

Where in the form is service charge inputted (for a non-holiday let). This is the largest expense of my rental income, almost a quarter of it is taken up by it.

[@aqeelzadi9438]

For a standard (non-holiday let) rental property, service charges are typically entered under "Other Allowable Property Expenses" in the UK Self Assessment tax return (SA105 form). Here’s a breakdown of where to include it: Steps to Claim Service Charges in the SA105 Form: SA105 Supplementary Page for Property Income: Complete the SA105 form for reporting rental income and expenses for property you let out. Property Expenses Section (Box 24 to Box 29): Service charges (such as building maintenance fees, communal area cleaning, security, etc.) are included under "Other allowable property expenses" in Box 29. If service charges are your largest expense, listing them under this general category is acceptable, as they qualify as an ordinary and necessary cost to maintain the rental property. Supporting Notes (Optional): While there’s no requirement to break down individual expenses, you can provide additional information in the "Additional Information" section of your Self Assessment if you’d like to clarify the nature of this significant expense. Alternatively, keep detailed records in case HMRC has any questions. Example of Where to Input on the Form Expense Type: Box Number on SA105 Service Charges: Box 29: Other allowable property expenses Other Expense Categories (for Reference) If you have other common expenses (e.g., repairs and maintenance, utilities), there are specific boxes for these: Repairs and Maintenance: Box 25 Loan Interest and Finance Costs: Box 26 Legal, Management, and Other Professional Fees: Box 27 Service charges fit well in Box 29 because they’re ongoing costs directly associated with renting out the property. Including them here ensures you account for them fully in your allowable expenses, thereby reducing your taxable rental income.

[@Worldwithoutboarders]

Thank you for the last 2 tax returns ❤❤❤

[@raptor2628]

Me and my partner jointly own a rental, we are both employees too who pay our taxes. Do we put yes or no in the employee section as we are only doing the self assessment to show our earnings from property income

[@NizamSulaman]

i am from South Africa

[@charlesdavies2596]

Hi will the gold subscription cover price cover myself and my wife’s self assessment returns

[@IanHook-wv9mj]

The thing that annoys me is that the wording on the calculation is 'profit from uk land and property'. It's not profit because the mortgage costs haven't come off that figure.

[@ahmedmaysani2519]

well done and many thanks, your efforts are highly appreciated.

[@alessandratisot6504]

thank you for the video and advice. Question: how do i manage to submit a self-assessment on line as a foreigner with no national insurance number. I earn income from a rented UK property.

[@rosemarytaylor8705]

Thanks for the helpful advice - One question: my husband usually transfers £1,260 to my tax allowance each year as he is a low earner from one property. This year he liquidated a private pension and this income takes him over his tax allowance. However, he also has losses to bring forward on the rental property due to lots of refurb costs in the previous tax year. Is it OK to bring forward enough losses to reduce his income below his personal tax allowance sufficiently to transfer the usual £1,260 to me? I can't see anything obvious that says he shouldn't. We fill in paper returns by 31st October.

[@CelideYoneda]

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[@brucerobert6392]

Terrific stuff. I used your advice last year as well.

[@ipprp7898]

Hi, thank you for such very great content u put on.. I just have a quick question regarding the interest only mortgage of a BTL property on personal name : I know now that we are allowed to have 20% reduction only as an expense on interest payment , do you fill in the full year interest you paid OR you only amount after deduction of that 20% ? MANY THANKS

[@roshantamangbal5278]

you are a star... thankyou for the video and explanation

[@MenandroRoark]

Excellent analysis, thanks! 👌 Need some advice: 🙏 I found these words 😅. (behave today finger ski upon boy assault summer exhaust beauty stereo over). Can someone explain what this is? 😅

[@mick-tl5ui]

what happens if your holliday let is less than 105 days? say for only 60 days?

[@hartpaulj]

Hi, great videos, very clear, helped me a lot. My property manager went bankrupt a few years ago and I lost a few months rent and the tenants deposit. The tenant left last year and requested his deposit back. As it was my resposibility I returned most of the deposit, keeping £150 for repairs. Can I claim this as an expense, if so what section does it go in. One other question, when I put my figures in the "Property repairs and maintenance" Section 27. I get a red warning message to say that this figure is high compared to total rental. Should I add some detail to the white space in section 45, any other information about UK property.

[@leemarsden1846]

Can you claim the “full amount” of buy to let mortgage fee you have to pay to secure a new mortgage deal?

[@aqeelzadi9438]

Yes, you can typically claim the full amount of the **mortgage arrangement fee** for a buy-to-let property, but the way you claim it depends on the fee’s classification: 1. Arrangement Fees as Finance Costs: - For buy-to-let properties, mortgage arrangement fees are generally treated as finance costs by HMRC. - These fees are deductible, but they are subject to the same tax relief rules as mortgage interest. Since April 2020, mortgage interest and related finance costs can no longer be deducted directly from rental income. Instead, landlords receive a 20% tax credit on these costs. - This means that rather than reducing taxable rental profits, you receive a reduction in your tax bill at the basic rate of tax (20%). 2. How to Claim: - You should include the mortgage arrangement fee as part of your finance costs on your Self Assessment tax return. - The tax relief will be calculated in line with other finance costs (like mortgage interest), which means you will get a 20% tax credit rather than a full deduction from your income. 3. Capital vs. Revenue Expense: - The mortgage arrangement fee is typically considered an evenue expense, meaning it can be deducted over time rather than being treated as a capital cost (which would typically be spread over the loan term). - In practice, most landlords claim the arrangement fee in the year it is incurred, in line with when it was paid. ### Example Suppose you paid a mortgage arrangement fee of £1,000. Under current rules, you’d claim a 20% tax credit, which would reduce your tax liability by £200. ### Additional Costs Keep in mind that other mortgage-related costs (e.g., broker fees, legal fees associated with the mortgage arrangement) are also considered finance costs and would be treated in the same way, with tax relief at the basic rate only. ### Summary While you can claim the full amount of the mortgage arrangement fee, you’ll get relief through the 20% tax credit system rather than an outright deduction against rental income. This may result in less tax relief than landlords received prior to the mortgage interest restrictions, which phased in between 2017 and 2020.

[@connercampbell4798]

Does it make a difference if me or my wife was to submit the tax return as she isn't working due to looking after our 20 month year old baby and has no income at present, opposed to me submitting it as I'm in full time employment?

[@chrishartle1326]

Everyone gets a personal tax allowance of £12,570 p/year so if your wife isn’t using any of that allowance then I’d say she should submit the tax return, however if the rental property is in both your names you’d have to complete a form to change the split 100% to her.

[@aqeelzadi9438]

Yes, it can make a difference in terms of tax efficiency if your wife submits the tax return instead of you, especially given that she currently has no other income. In the UK, this strategy could help you take advantage of her unused Personal Allowance and potentially reduce your family’s overall tax liability. Key Points to Consider Personal Allowance: Every UK taxpayer has a Personal Allowance (currently £12,570 for the 2023/24 tax year), meaning they can earn up to this amount without paying income tax. If your wife has no other income, she could use her allowance against rental income, potentially reducing or eliminating tax on the property income entirely. Tax Bands and Rates: If the rental income is allocated to you, it would be added to your employment income, which could push you into a higher tax band or increase the tax you pay on that portion of your income. If your wife reports the rental income, she may fall into a lower tax band (or potentially pay no tax at all if the income is below her Personal Allowance). Ownership of the Property: For tax purposes, you generally need to declare income in line with the ownership structure. If you both own the property equally, the rental income is typically split 50/50 by default. However, if you want to allocate a different share of the income to take advantage of your wife's lower tax bracket, you could consider setting up a Deed of Trust and submitting a Form 17 to HMRC, which allows you to declare unequal income splits based on the beneficial ownership proportions. If the property is solely in your wife’s name, she can report the entire rental income on her tax return. National Insurance Contributions (NICs): Rental income generally doesn’t attract National Insurance, but if the rental activity is extensive enough to be considered a business (e.g., several properties or actively managing them), it may have NIC implications. Example Scenario Suppose the rental property generates £10,000 annually in net income: If you report it: This income would be added to your existing earnings, which may be taxed at 20%, 40%, or higher depending on your total income level. If your wife reports it: Assuming her only income is the rental income, she could use her £12,570 Personal Allowance against it, meaning she might pay little or no tax on it if the income falls within this allowance. Practical Steps Confirm Ownership Structure: Make sure that ownership aligns with who is reporting the income. If it’s jointly owned, consider a Deed of Trust and Form 17 if you want to adjust the income split. Keep Records: If you decide to make changes to the income allocation, keep records for tax purposes, especially any declarations made to HMRC about income shares. Allocating the rental income to your wife, given her low current tax liability, could be a tax-efficient approach for your family. Consulting with a tax advisor can ensure that you structure this optimally and in line with HMRC guidelines.

[@stevensoutham1324]

Hi, if I claim property income allowance for one residential property, does this negate me from claiming expenses on another residential property?

[@aqeelzadi9438]

No, claiming the property income allowance (currently up to £1,000 per year in the UK) on one residential property does not automatically prevent you from claiming actual expenses on another. Here's how it works: Property Income Allowance: This is a flat £1,000 allowance that you can claim instead of deducting actual expenses. It simplifies tax reporting because it lets you reduce your rental income by £1,000 without needing to track specific costs. Separate Treatment for Different Properties: You can choose the property income allowance for one property while opting to claim actual expenses for another. This means that, if advantageous, you could apply the £1,000 allowance to a property with minimal expenses and deduct actual expenses on a property where those costs are higher than £1,000. Important Considerations You cannot apply the £1,000 allowance and actual expenses to the same property. For each property, you need to choose either the allowance or actual expenses. Record-Keeping: Keep separate records of each property’s income and expenses, as this will help when making these decisions and in case of any questions from HMRC. Example Scenario Suppose you have two rental properties: Property A: Generates £8,000 in rental income with only £500 in expenses. Property B: Generates £10,000 in rental income with £3,000 in expenses. For Property A, you might claim the £1,000 property income allowance, reducing taxable income from £8,000 to £7,000. For Property B, claiming actual expenses would be better, as they exceed £1,000. So, you’d report rental income as £7,000 (after deducting £3,000 in expenses). This flexibility allows you to maximize your tax efficiency across multiple properties.