Finally! –  It is nice to have some positive news on tax!

Last month, I met with Tracey Jones, Director of Fergusons & Peters Chartered Accountants, to discuss a relatively new property tax relief that is going under the radar of landlords who submit their own tax returns.

Property Allowances – Marginal Relief

Tracey explains: “The second Finance Act of 2017 included the promised exemption for small trading activities and property income.

If an individual’s income from rent does not exceed the trading allowance for the year, then no tax liability will arise on it.”

The trading allowance for 2017/2018 is £1,000 and if the rent received within a tax year is excess of £1,000, you can elect how to be taxed.

This marginal relief will allow landlords to deduct £1,000 from rental income without producing any receipts, and replaces the claim for general rental expenditure, e.g. insurance, maintenance costs, mortgage interest, etc.

As a result:

•  Landlords with a rental income of less than £1,000 in a tax year in will no longer incur a tax liability. This is available to each partner holding a share in the property, they will each receive the £1,000 exemption.
• Landlords with expenses of less than £1,000 per year will be able to claim marginal relief and reduce their profits. This relief is available to each partner holding a share in a property.

The tax year runs from 6th April 2017 to 5th April 2018, and tax returns must be submitted by 31st January 2019. Now is a great time to start looking at last year’s rental income, and plan for your bill.

All McCartan Landlords on our management service have received a free annual statement for the last tax year, making it even easier for our landlords to submit their returns early.

Now would also be a great time to plan for your current years’ tax liability, especially if you will need to take into account the reduced 50% interest relief on your mortgage that could increase your bill for 2020.

Getting Professional Accountancy Advice

If you have any questions about tax in relation to rental property income, drop Tracey an email by clicking here.

If you are looking to invest in Buy to Let property in Swansea and would like some free advice on the best areas to invest, or if you would like a free review of your rental property, why not book a free 45 minute consultation with McCartan? Click here to book.

Related: Rude Awakening for Landlords as Tax Year Ends / Is Your Landlords Gas Safety Certificate Valid?