No doubt, as a landlord, any income from rent the law requires that you pay tax. Meanwhile, for those venturing into Airbnb management in London, understanding the tax implications on rental income becomes even more pertinent. The amount you pay as tax from your rental income would depend on your profit. If you have so many properties where you collect rent, you are required to pay tax on all the amounts collected as rent.

Calculating your rental income can be perplexing sometimes, especially for new landlords. However,, calculating your rental income is simple if you follow the right tips. Read and learn how to calculate your rental income tax.

The amount a landlord must pay on rental income

The process of paying tax on your buy-to-let property is easy. Meanwhile, the amount you pay as a rental tax depends on what you receive as rent. Check out the amount you pay as rental tax below.

• If your total rent for the year is less than £1,000, you, don’t have to pay tax.
• If your rental income is between £1,000 and 2,500 yearly, you must report to HMRC.
• If your earnings from rent is between 2,500 and 9,999 after deducting your allowable expenses, then you need to contact HMRC and complete a tax return.

Would I pay rental income tax if I make losses?

Usually, during your first year of owning a buy-to-let property, you often get losses because of refurbishing and other additional expenses that may occur. Therefore, this means that your allowed expenses are higher than your income. Invariably, you have made an income tax loss. If you make a loss on your property, it can be relieved against the future profit from your rental business. Mind you, you cannot write off your income losses from rent against any other income.

Why should you hire an accountant to calculate your rental income tax?

Many homeowners of a buy to let property often shy away from hiring an accountant to calculate their rental income tax. Calculating your rental income tax is simple, but it can become complicated for first-timers. Therefore, you may need to hire an accountant to calculate your rental income tax for at least two years before you get used to it. Below are the benefits of hiring an accountant to calculate your rental income tax.

• It will help you pay the right rental income tax. At least you will not be worried about overpaying for underpaying.
• You will always pay your taxes on time without attracting fines.
• It will relieve you of the stress associated with calculating rental income tax. Also, hiring an accountant will save you the time that you would spend trying to calculate your taxes.
• It will eliminate errors associated with calculating rental income tax.

Conclusion

It is safer and better for first-time homeowners to use the services of an accountant to calculate their rental income. Rental income tax must be paid for a buy-to-let property. If you delay or don’t pay your rental income tax at all, you may have to pay a fine or even imprisonment.

James Montano