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Tax Return deadline day fast approaches

Tax Returns Deadline 2016
Michael Wright
Written by Michael Wright

There are now just around 3 weeks to go until tax return deadline day.  It was reported that around 8,000 taxpayers took a break from festivities to file their tax return on either Christmas Day or Boxing Day! But if you have yet to complete your self assessment tax return, you will need to move fast.  By 31st January 2017, you will need to file your tax return and pay any tax owed to avoid penalties.  In addition, if HM Revenue and Customs (HMRC) require payments on account towards the 2016/17 tax year, then this first payment is also due by 31st January 2017.

Whilst 30th December has passed, it is important to note this date for your next tax return; this is the date to complete your tax return if you would like your outstanding tax collected through your PAYE notice.  However, there are conditions to meet here, such as the liability being less than £3,000.

If this is your first year completing your tax return, you may find this self assessment tax guide useful.

Landlords letting fully furnished properties should be warned that your tax return due by the end of this month, is the last year you may claim for wear and tear allowance.  This is due to HMRC abolishing this from 6th April 2016 onwards, therefore affecting tax return periods from the 2016/17 year onwards.  On the plus side, though, you will be able to claim for the replacement of moveable furnishings from the 2016/17 tax return deadline period onwards, as will all other landlords of buy to let property, except for Furnished Holiday Lets who have a different tax treatment.  It is important to note that it is only the replacement cost which is claimable, not the original cost.  So, if you replaced, say, a washing machine, then this may be claimable, but if you purchased for your tenant a brand new tumble dryer which has never been in the property before, this would not be claimable; although if this was replaced in a few years’ time, then this would be claimable. The replacement must be like-for-like or the nearest modern equivalent, with HMRC also allowing you to claim costs incurred when you dispose of the previous furnishings.  However, you also need to account for any proceeds received for the replacing the furnishing.

In recent times, there has been a large focus on Section 24 and the upcoming restriction of mortgage interest and finance cost claims.  Whilst this 4-year phase in commences in April 2017, it is worth pointing out that this is the 2017/18 tax year, and so this will first be applicable for the tax return due for filing by 31st January 2019.  Nevertheless, as we have stressed before, it is extremely important to review your own position, taking any necessary action as part of your overall strategy.

There are a huge number of expenses which may be deducted from your rental income when calculating your taxable profit, and if you are in any doubt, it is highly recommended to seek professional assistance from a property tax advisor such as www.rita4rent.co.uk   In particular, repairs can often be a complex area, as sometimes they may be deemed an improvement cost, and therefore not claimable against rental income, but instead against potential capital gains on future sale.

As an RLA member, please do not forget too that your membership fee is an allowable deduction against your rental income. When new clients approach us, this is a regularly occurring transaction which is missed by landlords.  HMRC state in their property income manual (PIM2205) that landlords may claim for “subscriptions to associations representing the interests of landlords.”

Finally, please note the following Tax Return deadline dates and other important dates for your diary in the coming year:

31st January 2017
Online filing for your 2015/16 self assessment tax return deadline.
31st January 2017
Deadline for paying your 2015/16 self assessment tax liability.
31st January 2017
Deadline for paying your first “payment on account” towards the 2016/17 tax year if applicable.
28th February 2017
If you do not pay your tax by 31st January 2017, this is the tex return deadline to avoid paying a penalty of 5% of the tax owed.
6th April 2017 
Section 24 – 4 year phase in commences.
30th April 2017
If you missed the 2015/16 online filing deadline, this is the deadline for filing your self assessment tax return to avoid the £10 per day penalties.
31st July 2017
For those who are liable to “payments on account,” this is when the second payment is due towards the 2016/17 tax year.
31st July 2017
Deadline to renew tax credits if applicable to you.
5th October 2017
If this is your first year as a landlord, this is the latest date you should register for self assessment if you need to prepare a self assessment tax return for the 2016/17 tax year.
31st October 2017
Deadline to file your 2016/17 self assessment tax return if you opt for paper filing.
30th December 2017
Deadline to file your 2016/17 tax return online if you wish to add your self assessment tax liability to a future tax code, assuming you meet the criteria.
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About the author

Michael Wright

Michael Wright

Michael Wright is Director of RITA4Rent Limited, specialists in property tax. With clients ranging from 1 property starters, to large portfolio landlords, Michael and his team are dedicated to working with landlords to order their taxes in the most efficient manner. As well as being partners of Residential Landlords Association and the Property Tribes, Michael and RITA4Rent have also been featured in numerous media outlets and contributed to several articles, such as in the Guardian, the Evening Standard, the Daily Mail, Letting Agent Today, MoneyWise, Accountancy Age, Simply Business, Northwood, Endsleigh Insurance and Aldermore Bank.

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