The consumer service Which? Has taken the unusual approach of setting out a 12 point guide to landlords about how to file their self-assessment tax returns for the 2021-22 tax year, which must be done within the next week by Tuesday January 31.
One of the points it makes is to remind landlords to offset licensing fees paid to the local council, if there are licensing regimes active in the areas where they own properties.
“Licensing schemes have been on the rise in recent years and that trend is continuing as more councils look to roll them out. Eligibility rules and costs of local licensing schemes vary significantly. In some areas, you might need to pay more than £1,000, but you will be able to deduct this as a business expense on your tax return” says Which?
Another point which some small-scale landlords may be unaware of is that if they made a profit of more than £6,725 from letting property in 2021-22, they may need to pay National Insurance if HMRC considers the property activities to constitute a business.
Which? says this is likely if being a landlord is your main job, you let more than one property or you're actively buying investment properties.
In more general terms, the consumer body points out that small costs such as phone calls and texts to tenants are often overlooked by landlords, but they are expenses which can also be offset. Travelling costs to your rented properties or paid-for subscriptions to industry publications can even be taken into account.
“Over the course of a year, you might be able to claim back more than you think. You will, however, need to have clear evidence of your outgoings and be able to prove they were exclusively for business use” it says.
Those landlords who are completing self-assessment returns but miss the closing date could be hit with an automatic £100 penalty plus further increases.
Full article: https://www.landlordtoday.co.uk/breaking-news/2023/1/hmrc-deadline--offset-licensing-against-tax-landlords-are-reminded