Declaring rental income and expenses on a self-assessment
Time to read: 3 minutes
When owning a rental property, it's essential for individuals to declare the rental income and expenses accurately on their self-assessment tax return. The income and expenses incurred must relate to the self-assessment tax period which is from the 06th of April to the 05th of April the following year.
Rental Income
As for the rental income, the total income received from renting out a property to tenants must be reported. This is regardless of the number of properties owned and the percentage of ownership for each property, as it is compulsory for all income and expenses to be included in the tax return. For example, if an individual has 50% ownership on a rental property, they are required to declare their share of income received and expenses incurred every tax year.
Rental Expenses
Similarly, expenses incurred in relation to the rental property can be claimed as deductible expenses. The allowable expenses which can be put through are:
- repairs and maintenance costs
- insurance
- professional, legal and management fees
- any other costs directly related to the property
It is important to note that there are some expenses which are not allowable to claim. These include:
- the full amount of mortgage payment – only a percentage of the full interest element of the mortgage payment can be offset as a finance relief
- personal expenses cannot be claimed that were not incurred solely for the property rental business e.g. personal utility bills
Self-Assessment Tax Liability
For individuals, it is useful to keep accurate records of all expense’s either via receipts, invoices, or bank statements. This is to benefit from claiming all the necessary expenses to ensure the tax liability is reduced.
The tax to be paid is on any profits made from renting out property. How much an individual pays depends on how much profit is made and their personal circumstances. Aside from rental income and expenses, on the self-assessment tax return there are several other income and expenses declared also, such as PAYE, self-employment, disguised remuneration, company dividends, etc. All of these factors and more are taken into consideration when calculating an individual’s self-assessment tax liability.
If you need help completing your self-assessment tax return, please do not hesitate to contact us.
At your service!
About Us
At 1st Class Accounts, we are a fully experienced team of accountants providing a full range of services for businesses of all sizes. We serve contractors, sole traders and limited companies nationwide. No matter what your accounting needs may be, we are ready to help. We strongly believe that our success is based on your success and we can genuinely say that we are committed to your financial well-being.
Send us a message
