Record Keeping Checklist & MTD Guide for UK Landlords
UK landlords are generally taxed on profits accrued from property portfolios in the UK and elsewhere. So, record keeping is crucial to ensure that your taxes are fair and accurate.
Aside from the benefits of good bookkeeping, you can face a penalty of up to £3000 by HMRC for failing to maintain adequate records for self-assessment purposes. If you own more than one rental property in your name, you can keep records of multiple properties under a single rental business.
Your property rental records must include:
- Rental income
- Expenses incurred
- Purchases of capital items
- Separate records for ‘furnished holiday lets.’ Our furnished holiday lets guide by Cardens’ Corporate Tax Manager Adam provides more information.
You must keep:
- Your invoices, expenses, capital items, receipts, rental statements and mortgage statements
- Submitted tax returns
- Past years’ income and expenditure
- Bank statements
- Property details: date of purchase, purchase price and associated costs
- Improvement costs for properties
- Details of when you lived in the property if it was once your main residence as you may be able to claim Principle Private Residence (PPR) relief.
Making Tax Digital (MTD) for Landlords
Spreadsheets and software can currently be used to keep records manually. However, the implementation of Making Tax Digital (MTD) will change record keeping for every business in the UK.
Under the process, taxpayers will be able to view and manage tax transactions and liabilities in a digital account. All records must be kept digitally. Find out what constitutes a digital link in our MTD guide.
Compulsory VAT registered businesses have already joined the scheme. From April 2024, MTD will apply to the self-employed, partnerships, landlords and trusts that receive income from property with a combined income of £10,000 or more. Those who earn less will be exempt. Note that this applies to income not profit.
Quarterly filing will also replace annual tax return submissions. HMRC will calculate your potential tax bill based on ‘real time’ as possible while reminding you of payment dates. The way you keep records and make payments is changing, not the underlying tax rules.
Completing quarterly submissions must be separated according to property business category. For example, separate submissions for lettings and furnished holiday lets.
Count On Cardens
Cardens is a specialist accountancy and business advisory firm for property investors, developers and agencies. If you need to keep on top of industry changes, reliefs and more, get in touch to discuss our ongoing services.
For more information, visit the HMRC index of record-keeping requirements for a business at www.gov.uk/keeping-your-pay-tax-records/rental-income