{"id":937,"date":"2022-01-18T00:00:00","date_gmt":"2022-01-18T00:00:00","guid":{"rendered":"https:\/\/duffyregan.co.uk\/index.php\/2022\/01\/18\/landlords-and-tax-the-basics\/"},"modified":"2022-01-18T00:00:00","modified_gmt":"2022-01-18T00:00:00","slug":"landlords-and-tax-the-basics","status":"publish","type":"post","link":"http:\/\/duffyregan.co.uk\/index.php\/2022\/01\/18\/landlords-and-tax-the-basics\/","title":{"rendered":"Landlords and tax &#8211; the basics"},"content":{"rendered":"<p>The following definitions set out how property income is calculated and taxed:<\/p>\n<ul>\n<li><strong>Rental income &ndash; <\/strong>includes rents, amounts received to cover use of furniture, cleaning of communal areas, hot water, heating and repairs to property.<\/li>\n<li><strong>Allowable expenses &ndash; <\/strong>any expense that you have laid out &ldquo;wholly and exclusively&rdquo; for the purposes of renting out a property can be deducted when working out net property income subject to tax. Costs include:\n<ul style=\"list-style-type:circle\">\n<li>general maintenance and repairs to the property, but not <a href=\"https:\/\/www.gov.uk\/guidance\/income-tax-when-you-rent-out-a-property-working-out-your-rental-income#new-imp\">improvements<\/a> (such as replacing a laminate kitchen worktop with a granite worktop)<\/li>\n<li>water rates, council tax, gas and electricity<\/li>\n<li>insurance, such as landlords&rsquo; policies for buildings, contents and public liability<\/li>\n<li>costs of services, including the wages of gardeners and cleaners<\/li>\n<li>letting agent fees and management fees<\/li>\n<li>legal fees for lets of a year or less, or for renewing a lease for less than 50 years<\/li>\n<li>accountant&rsquo;s fees<\/li>\n<li>rents (if you&rsquo;re sub-letting), ground rents and service charges<\/li>\n<li>direct costs such as phone calls, stationery and advertising for new tenants<\/li>\n<li>vehicle running costs (only the proportion used for your rental business) including mileage rate deductions for business motoring costs<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Expenses you cannot claim &ndash; <\/strong>include:\n<ul style=\"list-style-type:circle\">\n<li>private phone calls<\/li>\n<li>personal expenses<\/li>\n<li>repayment of loan capital &ndash; you can only claim for interest on the loan but see following section.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Interest paid on mortgages and loans &ndash; <\/strong>individuals that run a property business can only claim a 20% tax credit. The gross interest paid is no longer deductible as an expense. This means that tax relief is restricted to 20%. This does not apply if you have incorporated your property business.<\/li>\n<li><strong>Incorporating your property business &ndash;<\/strong> if you run your property business inside a limited company structure, any profits and gains will be taxed at corporation tax rates, currently 19%. As indicated above, companies can deduct mortgage and loan interest as an expense.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Unsurprisingly, there are grey areas that you will need to consider. Before embarking on the acquisition or disposal of a rental property, perhaps for the first time, it is well worth investing in a planning session to consider the most tax efficient way to organise matters. We can help. Please call to discuss your options.<\/p>\n<!-- -->","protected":false},"excerpt":{"rendered":"<p>The following definitions set out how property income is calculated and taxed: Rental income &ndash; includes rents, amounts received to cover use of furniture, cleaning of communal areas, hot water, heating and repairs to property. Allowable expenses &ndash; any expense that you have laid out &ldquo;wholly and exclusively&rdquo; for the purposes of renting out a [&hellip;]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-937","post","type-post","status-publish","format-standard","hentry","category-uncategorised"],"_links":{"self":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=937"}],"version-history":[{"count":0,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/937\/revisions"}],"wp:attachment":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=937"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=937"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}