Plan A's Accountancy Service for Landlords in Essex
With HMRC being keener than ever to ensure that both commercial and residential landlords are filing their tax returns correctly, the importance of preparing and managing accounts has never been greater.
Keeping and declaring records is essential in case of an HMRC investigation. Though the organisation tends to target landlords it suspects of lax declarations, enquiries can be completely at random and often result in fines for those who have let their standards slip.
HMRC can target landlords by information requested from letting agents or a simple look at the land registry to indentify indvidiuals with multiple properties and cross reference to see if these people are declaring rental income on self assessment returns.
Reasons for records
As is always the case with taxable income, the key is to be organised. Landlords must ensure that they keep full details of rental income and expenditure. This will be needed when they complete their yearly tax return.
Many people we speak to believe that they do not need to complete a self assessment return as their rental property is not making any profit. There are two main issues with this incorrect assumption.
- An unqualified individuals calculation of profit, for example they may be calculating in allowing the whole mortgage cost as allowable expenditure when in fact it is only the interest element that is allowable.
- By completing a return with a loss, you benefit from carrying this loss forward to future years when hopefully rental profits are being made.
Capital expenditure and allowable expenses
Capital expenditure includes such items as furniture and electrical fittings that help landlords to offer their service. To ensure that they are declaring records accurately, landlords should keep a full record of these.
Since being a landlord is a form of business, HMRC is aware that it comes with other expenses, and such costs as agency fees and building insurance can be declared as ‘allowable expenses’.
To request a free quote for your Essex landlord business contact us now.
Rental accounts by property
- Assessing wear and tear allowances
- Calculating allowable mortgage interest
- Distinguishing revenue and capital expenditure
- Capital gains tax planning