Few landlords are keen to wade into the bewildering world of tax return allowances but by dipping your toe in, significant sums can be saved if you know what you are entitled to claim. So, if you do your own return, here are some of the items you might not know you can claim (and one you can’t).
- Wear and Tear
If you property is rented ‘furnished’ then HMRC allows you to either offset, each year, ten per cent of your net income against tax or to claim for individual items’ net replacement such as furniture, white goods or TVs.
- Fixtures and Fittings
HMRC considers things you would expect to be in the property when you bought it such as baths, basins and central heating systems as ‘integral’ and allows landlords to claim any expenses incurred replacing or repairing these items in addition to the 10% wear and tear allowances detailed above. But you have to be careful when replacing items – if you sell the replaced item on Ebay, for example a ‘tired’ but working washing machine – you must deduct the money you get for it from the amount you claim. Also, you cannot upgrade – it must be a replacement.
The most obvious items to claim are the costs of repairing your property but the range of items covered is wider than you might think and includes things such as stone cleaning, damp and rot treatment, roof repairs and brick re-pointing.
- ‘Void Periods’
Landlords often ask if months when no tenants are in a property can be offset against tax, but HMRC doesn’t make direct allowances for it – it instead looks at your income and expenses on a yearly, not monthly basis.
- Business Travel
If you drive to your rental property or properties then you can claim the ‘mileage’ or other legitimate costs of your travel.
Any money spent advertising your property on websites such as gumtree etc or in newspapers is a legitimate expense.
- Energy Saving Allowances
To encourage landlords to ‘green’ up their properties, HMRC offers a Landlord’s Energy Allowance of up to £1,500 per dwelling. This includes the expense of loft insulation, cavity and solid wall insulation, draught excluding, hot water system insulation and floor insulation.
- Rent Collection
The expenses of collecting your rent (such as fees paid to an agent) is allowed.
Charges by your bank to run an overdraft solely for the purposes of your rental business or property are allowed.
- Mortgage interest
Interest on a buy-to-let mortgage is deductible as a legitimate expense but the repayments on it are not.
if you require any further assist please do not hesitate to contact me, please seek professional advice on any tax issues from your accountant.
Swindon Property Blog