Tax Liabilities

Any income received from a rental property is deemed to be a taxable one. Payment of income tax for a UK resident is the landlord’s responsibility and it will be up to you to file any tax returns or claims. Legislation provides for a range of landlord’s expenses that can be offset against the rental income. Some examples of these expenses are listed below, but this list is not exhaustive and professional advice should always be sought to guarantee that the full potential of the expenses are realised.

• Insurance premiums still paid on the property, e.g. buildings/contents policies
• Maintenance and repair costs of works carried out during a tenancy
• Mortgage interest payments
• Agents’ fees
• Utility bills (if still paid by the landlord)If you are to reside outside the UK then your tax liabilities differ. Under the Taxes Management Act 1970 and the relevant 1996 amendments, where a landlord resides abroad and receives income from a rented property, the tax liability can be made to rest upon the party responsible for collection of the rent.

Under the FICO regulations, we as collectors of your rent must deduct tax from your rent each month and pay this to the Inland Revenue each quarter. Unfortunately this has to be carried out regardless of whether or not you are actually taxable on the income. However, you are able to apply for an ‘exemption certificate’ from the Inland Revenue which waives us, as the rent collectors, from any liability. If this exemption is granted, we will pay any appropriate rent payments to you without any tax deductions.
To assist you in completing your tax returns, we will obviously provide you with regular rental statements detailing all deductions made and all payments made to you.