Taxation

TAXATION

Income Tax is payable on all letting income received by a Landlord whether they are residing in the United Kingdom or abroad. The introduction of self assessment under the Finance Act 1995, requires that Landlords must complete a Tax Return form declaring their rental income for the tax period and it is the Landlords responsibility to inform Her Majesty’s Revenue & Customs (HMRC) accordingly. The tax due is calculated upon your rental income minus allowable expenses such as a) Mortgage Interest b) Insurance & Ground Rents c) Legal and Accounting charges d) Costs of maintenance and repairs but not the cost of improvements and e) An allowance of 10% for wear and tear (where applicable) and f) Agent’s fees including VAT at the prevailing rate.

OVERSEAS LANDLORDS

Even if you are not resident in the United Kingdom (which means that you live abroad permanently or go to work abroad for lengthy periods) the profit made from rental income after the deduction of allowable expenses is subject to UK income tax. However, under current legislation, as the Letting Agency acting for you we are required BY LAW to withhold tax from rental income unless exempted by written authority from HMRC. Landlords can apply to HMRC for approval to receive their rent with no tax deducted, however Lettings Agency cannot pay the gross rent to a Landlord until written confirmation of the same from has been received from HMRC.

MORE INFORMATION ABOUT TAXATION IS AVAILABLE FROM THE HMRC HOTLINE ON 08459 000 404. THE DETAILS PROVIDED ABOVE ARE NOT EXHAUSTIVE AND ARE GIVEN PURELY AS A GUIDE. IF YOU ARE AT ALL UNCLEAR ABOUT YOUR TAX LIABILITIES IN THIS REGARD WE SUGGEST THAT YOU CONTACT A TAX EXPERT/ACCOUNTANT OR CONTACT HMRC AT http://www.hmrc.gov.uk/

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