As a landlord operating in the UK property market, tackling the ever-changing tax landscape can be an onerous task. That’s where we, at AXT Accountants, come in. Today, we’ll be discussing the recent changes in landlord tax laws and how they impact your bottom line.
From Wear and Tear Allowance to Replacement Relief
Gone are the days of claiming 10% of your rental income for wear and tear. The tax year 6 April 2020 to 5 April 2021 saw the introduction of Replacement Domestic Item Relief. This new legislation allows landlords to claim only the cost of replacing domestic items in the property, such as furniture, furnishings, appliances and kitchenware. Understanding the specifics of this change can be complex, but our team of expert accountants is here to guide you through the nuance of property tax.
Changes in Capital Gains Tax
Another significant change in the tax landscape is around Capital Gains Tax (CGT). If you sell a property that is not your main home, you are required to pay CGT on the profits. Starting from April 2020, landlords must report and pay any CGT within 30 days of completing the sale of a property. This is a drastic reduction from the previous time frame of reporting and paying CGT by the 31st of January following the end of the tax year when the disposal was made. Failure to meet this deadline could result in penalties, highlighting the importance of proactive property tax management.
The Abolition of Mortgage Interest Tax Relief
Beginning from the tax year 2020-2021, landlords are no longer able to deduct any of their mortgage expenses from rental income to reduce their tax bill. Instead, they will receive a tax-credit, based on 20% of their mortgage interest payments. This is a substantial change from previous years, potentially leaving higher and additional rate tax payers with a larger tax bill.
Staying Compliant with AXT Accountants
These changes in landlord tax laws underline the importance of staying up-to-date and compliant. As specialists in property and construction accounting, AXT Accountants are perfectly poised to help you navigate these changes. Our expert team has a deep understanding of UK property tax laws and can help ensure that you’re compliant, while also taking full advantage of any tax relief measures available to you.
If you’re feeling overwhelmed by these changes, or simply want to ensure you’re paying the correct amount of tax, why not get in touch with our team? We offer a comprehensive range of services, from tax planning and compliance to bookkeeping for landlords. At AXT Accountants, we’re committed to guiding you through the complexities of landlord tax, helping you to maximise your profits and minimise your tax bill.
Contact us today to find out how we can help you navigate the complexities of UK property tax laws.
