Jan 13

Top Tips for Landlords on Reducing Tax Liability

With only ten days to go until landlords must have filed their Tax returns, here are our top tips for reducing Tax liability.

1) Claim Costs as Revenue Expenses
In the current climate, where possible ensure that expenses are deductible as revenue expenses, as they will minimise your income tax. For example, the cost of replacing single glazed windows with double glazed windows can be claimed as a revenue expense.

2) Claim ‘ALL’ Property Expenses

If you have made any expenditure then make sure that you keep a permanent record of it, so it isn’t overlooked when you come to claim it as an expense. It doesn’t matter how small or large the expense is and remember the Tesco strap line...’Every Little Helps’!

3) Timing Can Be Everything
Record low interest rates have lead to many more landlords making a profit on their rental income. If this is the case then you could end up with a hefty tax bill even after all your expenses have been paid. So to help minimise your tax burden, consider making some ‘repairs’ in the same tax year to bring down the tax bill.

4) Avoid Capital Gains Taxes
If you can, always consider letting out a property that has previously been your main residence. It is the simplest and most effective way to avoid capital gains tax!

5) Make Sure You Register Any Rental Losses
If you have made losses in the previous tax years then by registering them with HMRC you will be able to carry them forward indefinitely and offset them against future profits.

6) Using Your Car for Your Property Business?
If yes then you will need to apportion the cost of the car between business and private travel each tax year. If your total miles for the year are 12,000, for example, and your property related trips total 2,000 miles, you can claim 2/12 of your car costs e.g. road tax, servicing, insurance, MOT etc.

7) Switch Property Ownership with Your Spouse if they are Lower Rate Taxpayers

If you have a spouse who is a lower rate (or even nil rate) taxpayer and you are a higher rate taxpayer, consider moving the greater portion of the property ownership into their name


About the author

Eddie Hooker Photograph Eddie Hooker has been involved in the insurance industry since 1985.  He worked with many large insurers such as Legal & General and AXA Insurance prior to setting up his own insurance business, Hamilton Fraser, in 1996.  Hamilton Fraser now employs over 130 staff out of their North London office, dealing with various insurance products for the buy-to-let property market such landlord insurance, rent guarantee insurance, emergency cover and tenancy deposit protection. 

Eddie and Hamilton Fraser Insurance first started to provide landlord insurance as early as 1996 when they became involved with the Small Landlord Association, which later became the National Landlords Association. 

By working closely with the industry’s leading companies Eddie and his team have built up a detailed understanding of the landlord market ensuring that the customer experience is founded on knowledge and support.  This has been highlighted in a recent customer survey that found that 95% of Hamilton Fraser customers were either satisfied or more than satisfied with the service provided by the company.

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