In today’s tough environment for landlords, whether you are looking for help with your tax return or want to know if a limited company structure is right for you, getting the right tax advice is crucial.
In today’s tough environment for landlords, whether you are looking for help with your tax return or want to know if a limited company structure is right for you, getting the right tax advice is crucial.
Landlords pay UK income tax on any rental profits. At the end of the tax year, landlords must declare the total net income from all their income sources. Property profits is calculated by adding together all the rental income you receive from various properties and then subtracting any allowable expenses.
Landlords pay UK income tax on any rental profits. At the end of the tax year, landlords must declare the total net income from all their income sources. Property profits is calculated by adding together all the rental income you receive from various properties and then subtracting any allowable expenses.
The tax that you pay on your property profits is determined by the rate at which you can pay your regular income tax for that year. Often, a landlord, will receive income from a variety of sources such as regular PAYE Income as well as investments, and income from buy to let properties.
The tax that you pay on your property profits is determined by the rate at which you can pay your regular income tax for that year. Often, a landlord, will receive income from a variety of sources such as regular PAYE Income as well as investments, and income from buy to let properties.
| Income Tax Band | Taxable Income 2023 – 2024 |
Income Tax Rate 2023 - 2024 |
Taxable Income 2024 - 2025 |
Income Tax Rate 2024 - 2025 |
|---|---|---|---|---|
| Personal Allowance | Up to £12,570 | 0% | Up to £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,139 |
40% | £50,271 - £125,139 |
40% |
| Additional Rate | £125,140 and above |
45% | £125,140 and above |
45% |
| Income Tax Band | Taxable Income 2023 – 2024 | Income Tax Rate 2023 - 2024 | Taxable Income 2024 - 2025 | Income Tax Rate 2024 - 2025 |
|---|---|---|---|---|
| Personal Allowance | Up to £12,570 | 0% | Up to £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,139 | 40% | £50,271 - £125,139 | 40% |
| Additional Rate | £125,140 and above | 45% | £125,140 and above | 45% |
Basic rate (20%) taxpayers should effectively receive full tax relief provided that the rental income before interest does not cause them to go into the higher rate of tax
Higher rate taxpayers may wish to consider purchasing new properties in a limited company as finance costs are allowable in full. However, lenders do tend to charge a higher rate of interest on loans to limited companies
Basic rate (20%) taxpayers should effectively receive full tax relief provided that the rental income before interest does not cause them to go into the higher rate of tax
Higher rate taxpayers may wish to consider purchasing new properties in a limited company as finance costs are allowable in full. However, lenders do tend to charge a higher rate of interest on loans to limited companies
Basic rate (20%) taxpayers should effectively receive full tax relief provided that the rental income before interest does not cause them to go into the higher rate of tax
Higher rate taxpayers may wish to consider purchasing new properties in a limited company as finance costs are allowable in full. However, lenders do tend to charge a higher rate of interest on loans to limited companies
The property income allowance of £1000 can be deducted from your rental income instead of any expenses. It is only worth claiming this allowance if your expenses are less than £1000. You cannot claim any expenses if you claim the Property Income Allowance.
The property income allowance of £1000 can be deducted from your rental income instead of any expenses. It is only worth claiming this allowance if your expenses are less than £1000. You cannot claim any expenses if you claim the Property Income Allowance.
