Income Tax Calculator for BTL Investors 2019-20

Income Tax Calculator for BTL Investors is designed to assist tax payers with income from property to estimate their SA tax liability.

CIS Tax Rebate is due when a construction industry scheme (CIS) subcontractor overpays income tax due to the fact that his/her CIS tax deductions are made without taking into account their tax-free annual allowance.

If you're not a property investor, you can still use the calculator by skipping the property section.

NOTE: The Income Tax Calculator for BTL Investors above is provided for research purposes only and is not meant to be relied upon for any other purpose. If you would to use our tax filing services please submit your email address along with a brief description of your requirements and we will get back to you.

How to register for self assessment?

You need to register for Self Assessment (SA) online and obtain a UTR (unique tax payer reference) number before you can submit a SA tax return.

Once registered, HMRC will send you a letter containing your UTR number within 10 working days.

HMRC requires a SA tax return from the following tax payers:

  • self employed
  • most company directors
  • people in partnerships
  • receiving: Income from property
  • Tips and commissions
  • Savings and investments
  • Dividends
  • Foreign income

How to apply for a government gateway ID?

To apply for Self Assessment online, you need a Government Gateway ID and password. However, if you do not have a government gateway ID, you can create one at the same time as you register online for SA.

Who are Non Resident Landlords (NRL)

Non-resident landlords are persons who have UK rental income, and whose ‘usual place of abode’ is outside the UK.

Landlords, for the purposes of the Non-resident Landlords (NRL) Scheme, include individuals, companies and trustees.

In the case of partnerships, each partner is treated as a separate landlord in respect of their share of the rental income.

Non resident landlords can apply to HMRC to receive UK rental income without deduction of UK tax - individuals.

What is the Non-resident Landlords Scheme?

The Non-resident Landlords (NRL) Scheme is a scheme for taxing the UK rental income of persons whose ‘usual place of abode’ is outside the UK (see paragraph 2.3 below). For convenience, these guidance notes refer to such persons as ‘non-resident landlords.

The Scheme applies to UK rental income paid to non-resident landlords from 6 April 1996. Different arrangements apply to UK rental income paid before 6 April 1996.

Letting agents of a non-resident landlord must:

  • deduct tax from the landlord’s UK rental income; and
  • pay the tax to HMRC’s Accounts Office, Shipley.

Where there is no letting agent, tenants who pay rent of more than £100 a week to a non-resident landlord must:

  • deduct tax from the landlord’s UK rental income; and
  • pay the tax to HMRC’s Accounts Office, Shipley

Tenants who pay rent of £100 a week or less do not have to operate the scheme unless they are told to do so by HMRC

Letting agents must operate the scheme regardless of the amount of the rent they collect - even if it is £100 a week or less.

For the purposes of the NRL Scheme, the year runs from 1 April to the following 31 March. Letting agents and tenants who have to operate the Scheme must account for tax each quarter - that is, for the three-month periods ending on 30 June, 30 September, 31 December and 31 March.

Letting agents and tenants do not have to deduct tax from the rental income of a non-resident landlord if HMRC has told them in writing that the landlord is approved to receive the rental income with no tax deducted.

How non resident landlords can apply to receive rent without deduction of UK tax?

HMRC provides the following an online application NRL1 Online Form to allow NRLs to apply to have rent without deduction of UK tax.

Self-Assessment Tax Return – Focus on Property Income FAQ

Should I register for self assessment if I receive property income?

Should I register for self-assessment if I receive rental income?

Yes, if you receive rental income from residential property, you may need to register for self-assessment if your profits exceed the tax-free property allowance of £1,000.

In addition to the property allowance, the additional considerations for filing a self-assessment tax return for property income are listed below.

What is the tax-fee property allowance?

Tax-free property allowance

The first £1,000 of your income from property rental is tax-free. This is your ‘property allowance’.

if your income from property rental is between £1,000 and £2,500 a year, then depending on your other sources of income, you may not have a file a self-assessment tax return.  What this means is that if you also have:

  • £2,500 to £9,999 after allowable expenses, or
  • £10,000 or more before allowable expenses, or
  • over £2,000 of income from company dividends, or
  • over £1,000 of bank or investment income, or
  • Capital gains from the sale of shares, property etc.

Then, you will be required to file Self-Assessment tax return.

The amount of your annual rental income should be stated in the tenancy agreement between you and your tenant.  In most cases, the rental agreement will be in the form of a Assured shorthold tenancy agreementwhich protect both the landlord and the tenant in the event of a dispute.

How do I report rental income from multiple tenants during the tax year?

If you have had multiple tenants during the same tax year, you need to account for the rent received from each tenant between 6th April and the 5th April of the following year.

What is Non-Resident Landlord Scheme (NRL) Tax?

Tax taken is off rental income where the landlord is a member of the Non-Resident Landlord  (NRL) Scheme

A landlord who lives abroad for more than 6 months of the year must pay tax on any income they get from renting out property in the UK. If the landlord is a company or trustee, the rules about their usual place of abode apply.

The tax is collected using the Non-resident Landlord (NRL) Scheme.

Who should use the non-resident landlord (NRL) scheme?

You should use the NRL scheme when tax is required to be deducted from rent if you are:

  • a letting agent
  • a tenant who pays over £100 a week in rent and whose landlord lives abroad

What you need to do if you’re a letting agent for a Non-Resident Landlord?

If you are a letting agent for a Non-Resident Landlord, you must operate the Non-resident Landlord Scheme regardless of how much rent you collect unless HMRC has told you that the landlord can receive the rent with no tax deducted. You may still need to register and complete an annual report.

You need to complete form NRL4i to register for the scheme

What are the allowable costs against rental income?

As with all business expenses, HMRC requires that they be incurred wholly and exclusively for the purpose of the business.

What you need to do if you’re a tenant of a Non-Resident Landlord?

If you're a tenant of a non resident landlord, you need to register with HMRC for the Non-resident Landlord Scheme and deduct tax from your rent.

You will need to provide your:

  • own name
  • address
  • landlords address

You also need to register with HMRC if you pay a UK representative of your landlord, such as a friend or family member, who isn’t a letting agent.

You don’t need to deduct the tax if HMRC has told you in writing that the landlord can receive the rent with no tax deducted, but you must still register with HMRC and complete an annual report.

Self Assessment Tax Return - Income from Property Sections

Property Income Allowance

If your property income is over £1,000 and you’re claiming property income allowance, the total amount of the allowance claimed from all property businesses (this includes overseas property businesses) cannot exceed £1,000.

Traditional accounting or cash basis

Cash basis is a simpler way of working out your property business profits or losses. You add up all your property income received (your turnover) and take off any allowable expenses paid in the year. Do not include money you owe or owed to you after 5 April 2021.

You can only use cash basis if your total income from UK property (including furnished holiday lettings in the UK) or income from foreign property (including furnished holiday lettings in the EEA) is up to £150,000.

If you have income from an furnished holiday lettings in the UK and UK property income, you must use the same basis (traditional accounting or cash basis) for both incomes.

Rent paid, repairs, insurance and costs of services provided

You can claim expenses, such as:

  • rents, rates, insurance and ground rent
  • property repairs and maintenance
  • costs of services you provided, including wages (include wages funded by the Coronavirus Job Retention Scheme paid out to employees)
  • insurance against loss of rents – however, if you claim under your own insurance policy

Loan interest and other financial costs

You can claim the costs of getting a loan or alternative finance to buy a property that you let, and any interest on such a loan or alternative finance payments.

However, you cannot claim the cost of any capital repayments from your mortgage. You must only include the proportion of the costs that are for the purpose of your FHL properties.

Relief for finance costs have been gradually phased out for periods between 2017 and 2020, and the years 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction.

Legal, management and other professional fees

Legal, management and other professional fees include:

  • management fees paid to an agent for rent collection, advertising and administration
  • legal and professional fees paid for renewing a lease (if the lease is for less than 50 years)
  • professional fees paid to evict an unsatisfactory tenant in order to re-let the property
  • any costs for appealing against a compulsory purchase order

Other allowable property expenses

Other allowable expenses include:

  • stationery, phone, business travel and miscellaneous costs
  • part of a premium paid to a landlord for the lease (if you’re subletting)
  • any foreign tax taken off your European Economic Area (EEA) Furnished Holiday Lettings income (unless you are claiming Foreign Tax Credit Relief for it on the ‘Foreign’ pages) – if you’re a non-resident furnished holiday lettings landlord, put the UK tax taken off in Box 21 Rent, rates, power and insurance costs under the Self Employment section.

Private use adjustment

If you put an amount in box 6 that was not solely for the business, put the private (non-business) amount in box 10. For example, if you include the full annual cost of insuring the property in box 6, but only let it for 8 months because you used it for 4 months, put the 4 months non-business cost in box 10.

Balancing charges

If you sold, gave away or stopped using an item in your business that you claimed capital allowances for, you may have to include a balancing charge. Put this amount in box 11.

Any balancing charges are regarded as income if you’re claiming property income allowance.

Electric charge-point allowance

You can claim 100% first year capital allowances for expenditure invested in the acquisition
and installation of new and unused electric charge-points for electrical vehicles.

If you’re claiming capital allowances for any other equipment or vehicles for your furnished holiday lettings (not other furnished residential lettings), put the amount here under capital allowances.

You cannot claim capital allowances if you’re claiming the property income allowance
 or using cash basis. The only exception for those using cash basis (and not claiming the trading income allowance) is cars.

Other capital allowances