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Updated: Jan 25

Property Records

As a landlord you are responsible for keeping accurate records of the figures used in the property pages of a Self-Assessment, these records must be kept for 5 years after the date the online return is due to be submitted. So, for the 2019-20 records they must be kept until 31st January 2026.

Your records must separate your income from fully-furnished lettings and unfurnished or part-furnished lettings (if you use the 10% wear and tear allowance), holiday lettings, rent a room and overseas lettings. This is because there are different tax rules for each type of rental income.

HMRC can charge you a penalty if your records aren’t accurate, complete and readable or if you don’t retain them for the required period of time. You may also have to pay a penalty if you submit an inaccurate tax return.

Records will include:

· Accounting Records

· Bank Statements

· Cash Books

· Rental or Tenancy agreements

· Invoices or receipts for allowable expenses

· Working Papers showing calculations

· Copies of Tax Returns

Multiple Properties

For those with more than one property then a separate calculation should be produced for each property. The profit/losses are then added together to give one overall total profit/loss.

How to keep your records

Most records can be kept electronically (on a computer or any storage device such as disk, CD, memory stick or microfilm) as long as the method you use captures all the information on the document (front and back) and can be presented to HMRC in a readable format.

Property Records the basis of Assessment

Land and Property accounts can be compiled using the accruals basis, which means that rental income is taxed in the tax year to which it relates, rather than the tax year in which the cash is actually received or spent.

The alternative simpler way of reporting and since 2017-18 tax year it has become the default is the Cash basis when all income received during the year is included, and all allowable expenses actually paid during the year are deducted. The use of the cash basis is allowed if the total income from UK property is no more than £150,000. If you have different types of property income i.e. Furnished Holiday Let in the UK and unfurnished residential property in the UK they must use the same basis when working out overall total income.

Selling your Rental Property in UK

If for what ever reason you sell your property than you may have to pay Capital Gains Tax. Regardless if you make a profit or loss on the sold property you must report it to HMRC

If you sold your property after 6 April 2020 you must report and pay Capital Gains Tax within 30 days of selling property in the UK.

Report and pay Capital Gains Tax

You may have to pay interest and a penalty if you do not report gains on property within the time limit.

Report in a Self Assessment tax return

You can file a Self Assessment tax return to report your gains in the tax year after you disposed of assets.

If any of your gains are from UK property sold after 6 April 2020, you should have reported them within 30 days of the sale. You must still include these gains in your Self Assessment tax return, if you send one.

If you do not usually send a tax return, register for Self Assessment after the tax year you disposed of your chargeable assets.

If you make a loss

You can report losses on a chargeable asset to HM Revenue and Customs (HMRC) to reduce your total taxable gains.

Losses used in this way are called ‘allowable losses’.

Using losses to reduce your gain

When you report a loss, the amount is deducted from the gains you made in the same tax year.

If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.

Reporting losses

Claim for your loss by including it on your tax return. If you’ve never made a gain and are not registered for Self Assessment, you can write to HMRC instead.

You do not have to report losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset.

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