This three-minute read
guides Kent landlords to declaring their rental income in the
best way possible.

If you rent out a property and receive a rental income from that, you
must declare it. You have to pay tax on any profit. It doesn’t change your
employment status to ‘self-employed’ though, as it’s considered an investment.

Of course, HMRC can be more complicated than a day at Hogwarts. The best advice will be to seek
professional advice from an accountant but we’ve picked out some key points
to start you off.

Start hoarding

HMRC unimaginatively call this ‘record keeping’. Be disciplined and keep
receipts, bank statements, invoices, rent books, even mileage logs, so you (or
your accountant) can easily make the deductions against your tax bill. This
means you get to keep more of the profit away from ‘the tax man’ in a legal and
ethical way, of course.

Expenses claims

There are a range of other allowable expenses. They are deductible only
if they’re exclusively for renting out a property and if you pay for them yourself.
This could include:

·
Water, council tax, electricity, and gas

·
Insurances

·
Services of, for example, cleaners or gardeners

·
Accountancy fees

·
Ground rents

·
Service charges

Maintenance and repairs

The definition from the gov.uk website is: ‘A repair restores an asset
to its original condition, sometimes by replacing parts of it’.

If the property requires new guttering after a storm, this would be
considered a repair and therefore, a deductible expense.

However, if you wanted to improve the guttering for another reason, like
changing the colour, this would not be allowable.

Improvements are not an allowable expense, like replacing a laminate
kitchen work surface for granite. The exception to this is updating things to
their ‘nearest modern equivalent’. This could be things like changing
single-glazing to modern, double-glazed windows.

If you replace an item with an upgrade, then you can claim the cost as
if you had replaced like-for-like. Take the work surface example: a 2m length
of laminate would be £150. The same size granite work surface could be £600.
You could claim the £150, not the £600.

Domestic item replacement

Furnishings like carpets and curtains are likely to be able to be deducted,
as long as you’re replacing like-for-like. Beds and free-standing wardrobes, or
other items that can be considered ‘movable furniture’ are also deductible.
Appliances, such as TVs or fridge/freezers, and even smaller items, like
cutlery and crockery can be offset against your income.

Partial expenses

If you’re letting a property that you have a mortgage on, you can’t
deduct the full amount of the mortgage payment. You can only offset the
interest element of the mortgage repayment against the income. Similarly, if
you use your car for a purpose related to the rental property, you can only deduct
the vehicle running costs for that particular purpose. This includes mileage
rate deductions.

For rental
opportunities in Kent, get in touch with us on 01634 304326. Our lettings
specialists can help you consider the market and the best options out there for
you.