This year the government are introducing new legislation for landlords, which for many, will mean they have to make significant changes to the way they run their businesses. Read about the new landlord tax changes and contact our team if you think your business will be affected.
Right to Rent Check
Firstly, from 1st Feb 2016 , buy to let landlords in England must check that new tenants have the right to rent via a Right to Rent check. This must be performed within 28 days of the new tenants moving in to your property or you could face a fine of up to £3000.
If your property is managed by a letting agency, the agency will carry out the check for you – but be warned, increased paperwork often leads to increased fees – contact your agency today to ask for their policy going forward.
Written into policy 3 years ago, the Government is finally cracking down on landlords who are renting via websites such as AirBnB who take payments online, by obtaining the websites’ customer records.
HMRC is expecting to return £250 million back into the economy by enforcing these checks for properties owned by Brits, whether that be in the UK or abroad.
“Money made by letting a property at home or abroad will be classed as income and must be declared to the taxman. If you are using the web site to source customers, then I would strongly advise to make the necessary declaration to HMRC.” – ACCA’s head of taxation, Chas Roy-Chowdhury.
So if you’re currently renting out a property and receiving payments online, it’s time to talk to our team!
Three key landlord tax changes from April 2016
Finally, and it’s a big one, landlords can expect 6 new tax changes this April.
- Replacement Allowance is introduced as 10% Wear and Tear allowance for furnished properties is scrapped.
- Buy to let investors and second home owners in England will see a 3% increase on stamp duty for houses worth over £40,000.
- Those who rent to lodgers will be affected by the new rent a room relief, which is increasing from £4,250 to £7,500 per year.
- Council and housing association tenants in England who earn over £30,000 (or £40,000 in London) will pay up to the market rent.
- The Help To Buy ISA and Right To Buy schemes will be put into action.
- And finally a change to the mortgage interest relief rate will see Landlord’s earnings take a hard hit between 2017 and 2020 – falling from 40-45% to only 20%.
If these new landlord tax changes affect your business or you feel unsure in any way about the tax changes facing landlords in 2016, contact our team of experienced accountants on 0161 477 6789 / 02031 741 436 or email us at [email protected].