02/05/2025
๐ก ๐๐ผ ๐๐ฎ๐ป๐ฑ๐น๐ผ๐ฟ๐ฑ๐ ๐ฃ๐ฎ๐ ๐ง๐ฎ๐
๐ผ๐ป ๐ฅ๐ฒ๐ป๐? ๐๐ฒ๐โ๐ ๐๐ฟ๐ฒ๐ฎ๐ธ ๐๐ ๐๐ผ๐๐ป! ๐ก
Thinking of joining the buy-to-let club in North East England? Before you start counting your rental profits, letโs talk tax! Yes, landlords must pay tax on rental income-but donโt panic, there are plenty of ways to lighten the load.
๐๐ฒ๐ ๐๐ฎ๐ฐ๐๐:
โข Rental income covers not just rent, but also things like utility payments, cleaning, and repairs if tenants pay you for these services.
โข You can claim a range of allowable expenses to reduce your tax bill, including:
โข Maintenance and repairs (not home improvements!)
โข Utility bills
โข Service charges
โข Ground rent
โข Council tax
โข Tax relief is available on items bought for tenant use (think beds, sofas, curtains, carpets), but only if you remove the old items.
โข Buy-to-let mortgage interest? You can claim a tax credit of 20% on the interest paid. For example, pay ยฃ15,000 in interest and get ยฃ3,000 off your tax bill.
โข Property income allowance: The first ยฃ1,000 of rental income is tax-free (ยฃ2,000 for joint owners), but you canโt deduct expenses if you claim this.
โข Tax rates for rental profit (added to your other income):
โข ยฃ12,571โยฃ50,270: 20%
โข ยฃ50,271โยฃ125,139: 40%
โข ยฃ125,140+: 45% (rates fixed till 2028/29)
โข If your expenses exceed your rental income, you can carry the loss forward to offset against future profits.
๐๐๐ป ๐๐ฎ๐ฐ๐:
Did you know that under the Rent a Room Scheme, if you rent out a room in your own home, you can earn up to ยฃ7,500 tax-free each year? Thatโs a lot of extra pocket money for minimal hassle!
๐ง๐ฟ๐ถ๐๐ถ๐ฎ ๐ง๐ถ๐บ๐ฒ:
From 2026, landlords will need to keep digital records and submit quarterly returns as part of the Making Tax Digital scheme-so get ready for a techy twist to your tax routine!
Ready to turn your property into profit? Want to know how to make the most out of your investment and pay less tax? Contact Midas today and letโs turn your property dreams into gold!