Allowable expenses

  • general maintenance and repairs to the property, but not improvements (such as replacing a laminate kitchen worktop with a granite worktop)
  • water rates, council tax, gas and electricity.
  • insurance, such as landlords’ policies for buildings, contents and public liability.

How is buy to let income taxed?

Yes. You need to declare any rent you receive as part of your Self Assessment tax return. The tax on your income is then charged in accordance with your income tax banding (20% for basic rate taxpayers, 40% for higher rate, and 45% for additional rate).

Allowable expenses a landlord can claim

  • water rates, council tax, gas and electricity.
  • landlord insurance.
  • costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
  • letting agents’ fees.
  • legal fees for lets of a year or less, or for renewing a lease of less than 50 years.

Do you have to pay tax on buy to let properties?

There is no simple answer.It depends on a number of factors such as how many properties you hold, whether you need the income quickly and how long you want to hold the properties for and your individual circumstances. Limited companies are not affected by the new mortgage interest relief restriction which came into effect from April 2017.

Do you have to pay land transaction tax in Wales?

Property buyers in Wales pay Land Transaction Tax (LTT) on residential properties worth more than £250,000, and on non-residential properties worth more than £225,000. As in Scotland, there are additional charges for residential properties worth more than £40,000 if you already own a residential property and are buying another.

What kind of tax do you pay on a property in Scotland?

Property buyers in Scotland pay Land and Buildings Transaction Tax (LBTT) on residential properties worth more than £145,000, and on non-residential properties worth more than £150,000. Scotland also has an Additional Dwelling Supplement, payable on properties worth more than £40,000.

Do you have to pay stamp duty on buy to let property?

Transferring a current buy to let property into a limited company can trigger stamp duty and capital gains tax charges at the time of transfer so advice should be sought before undertaking such a transaction. Due to the complexities of this area it is essential that you seek proper professional tax advice.