When a property is rented out it is a legal obligation to declare any profits to HMRC. However, it is often the case that a loss will result; in this circumstance, these losses can be used to reduce future profits.
We complete rental accounts showing a full reconciliation of income and expenditure and complete the property pages on the self-assessment tax return.
Q: Do I have to declare my profits?
A: Yes, you have a legal obligation to inform HMRC of all rental profits and maintain accurate records.
Q: Will I get higher rate tax relief on my mortgage interest?
A: No, tax relief is capped at 20% (current basic rate).
Q: Should I declare losses?
A: Yes, as any losses arising can be carried forward and used to reduce future tax bills.
Q: Will I have to pay capital gains tax when I sell my property?
A: This will be dependent on whether or not a capital gain has arisen and whether or not you have recorded and declared all capital expenditure.
Q: When is capital gains tax payable?
A: As from 6 April 2020 the tax must be paid within 30 days
Q: Will I have to pay stamp duty when I purchase a buy-to-let property?
A: Yes, you will, and from March 2016, a stamp duty land tax surcharge is payable. There is a sliding scale, starting at 3%.
Example:
Purchase price £300,000
Standard SDLT 5%
Surcharge 3%
Total 8%
Charge £24,000
Q: What are the current SDLT rate?
A: Standard Additional excess rate*
|
|
Standard |
Additional excess rate* |
|
£0 and up to £125,000 |
NIL |
3% |
|
Over £125,000 and up to £250,000 |
2% |
5% |
|
Over £250,000 and up to £925,000 |
5% |
8% |
|
Over £925,000 and up to £1,500,000 |
10% |
13% |
|
Over £1,500,000 |
12% |
15% |
*NB additional excess rate not applicable to companies