Buy To Let Updated:
High demand for rental accommodation has provided a significant boost to the buy-to-let mortgage sector, with a growing number of people using property as a profitable form of investment.
It is important to bear in mind that leasing a home in the UK is subject to a number of taxes, such as income tax, regardless of how many properties you own.
Here is a rundown on tax relief when renting out a property:
Any rental income is subject to tax which you must declare as part of your Self Assessment tax return. The tax on the rental income will be charged in relation to your income tax banding (20% for basic rate taxpayers, 40% for higher rate, and 50% for additional rate).
As a landlord you can scale down the tax you have to pay by deducting specific "allowable expenses" from your taxable rental income. Allowable expenses include:
An accountant will be able to help you to make the most of your allowable deductions so that you don't pay more tax than you have to. Accountant fees are tax deductable too!
Speak to HM Revenue & Customs, or visit www.hmrc.gov.uk/ for more information on tax and how it affects you as a landlord.
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The moneyfacts.co.uk guide to buy-to-let mortgages BTL: Have you considered the investment risks?
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