When to register/pay tax

[Socalledben]

Hi. New to all this. Bought a flat at the end of Oct 2020 with tenants in it. So should i be registering for the jan 31 self assessment to pay tax on the income recieved over the last three months? Or do i wait a full 12 months first?

[theartfullodger]

Presume you are asking about income tax only, Reporting for tax year 20202021 has a deadline of 31/02/2022 so ...

Suggest you buy a book on property tax eg...
https://www.amazon.co.uk/How-Save-Pr.../dp/1911020595
- there are more than 10 taxes a landlord may pay...
Reading such a book will save you more ££ & time than it takes to buy & read.

But make sure you've recorded & won;t throw away records of purchase - prices, expenses, invoices etc for eventual CGT or IHT. Could be 30, 40 years before you need those records...

Bougt in your own name or that of a company??

How's the letting of it going??

[jpkeates]

When you start a new business or acquire a new (non PAYE) you should ideally tell HMRC.
They will then tell you how they want to collect any tax due.

It's not a tax issue, but make sure your conveyancer (or you) served the right notices to the tenant when you took over the tenancy (usually referred to as section 48 or section 5 notices).

[Socalledben]

Thanks for the info. Ill get that book. Yes i meant income tax from the rent. Rent started coming in from Oct 31st 2020, so is it right that i dont have to register for a self assessment and pay the tax yet? If im doing it online, the id have a deadline for self assessment of Oct 5th 2021?

[Socalledben]

Its in my own name, not a company.

[Socalledben]

What would the sec 48 or 5 notices be for? The tenants are staying put so for them its a simple change of landlord.

[theartfullodger]

............... but make sure your conveyancer (or you) served the right notices to the tenant when you took over the tenancy (usually referred to as section 48 or section 5 notices).

Very good point...

Regardless of rent coming in, if s48 not served the no rent is due (so tenant can stop paying & there's no need for him to pay...) and is s3 (no 5..) notice not served possible criminal conviction and/or fines. Sadly s3 rarely enforced.

I take the view that if I'd like my tenants and agents to abide by the law, would make sense if I abided by law & thus made sure I'd served valid s48 & s3 notice(s). (Depending on circumstances could be just one notice)

[Socalledben]

Thanks. Yes conveyancer informed tenants and they had to sign to say they were aware/didnt object to a change of landlord. I happen to live next door so they were aware of everything from the start. Its better for them as previously the landlord used an agency and they found it difficult to get some basic things fixed inside the flat, now they pay me directly as i dont use an agency, and they have got things fixed quickly.
so, long story short, i dont have to register for self assessment or pay tax until oct 5th 2021?

[jpkeates]

What would the sec 48 or 5 notices be for? The tenants are staying put so for them its a simple change of landlord.

They're the formal notices you're required to give a tenant to confirm you're the new landlord.

It's not complicated.
It's basically your name and address and confirmation that you're now the landlord and owner of the property.
The address has to be in England or Wales and must be somewhere legal notices can be served.

Not serving the notices makes any future notices (like a notice to quit or a rent increase invalid).
More to the point, not doing so is technically a criminal offence and means that rent doesn't have to be paid to you until you serve the notice.

And it's a section 3, not 5, notice (tiny text on a phone!)

[Neelix]

If you aren't used to submitting a tax return it may be a sensible move to consult a local accountant to help you with the first couple of years - sure this will cost BUT getting tax bills down the line are best avoided.

In the meantime keep ALL invoices relating to the purchase, preparation and maintenance of the property PLUS all the paperwork and records for the rental income as you will need to refer back to these for your tax returns. If you have a mortgage on the property, you will need to keep all this paperwork to hand too

AFAIR for this year ending March 2021, you will need to submit a tax return by the 31st Jan 2022

[Socalledben]

Thanks. In regards to keeping a record of rent income, i assume bank statements are enough? They pay me directly, so there arent any paper invoices or anything. I have a separate bank acc setup for all of it. Is this enough?

[theartfullodger]

..................
It's basically your name and address and confirmation that you're now the landlord and owner of the property.
The address has to be in England or Wales and must be somewhere legal notices can be served.

...............

(Apologies JPK!).. Not quite;

S48 must be AN address in England or Wales (could, say, be c/o letting agent).
s3 Should be landlord's ACTUAL address, wherever that is in the world...

(Took me 3 months to get my letting agent to understand this when I was living in Scotland..... so there had to be two addresses given....)

[AndrewDod]

Reporting for tax year 20202021 has a deadline of 31/02/2022 so ...

Artful has a rare typo - should be 31/01/2022.

31/02 would be quite nice though whenever that comes up

[jpkeates]

S48 must be AN address in England or Wales (could, say, be c/o letting agent).
s3 Should be landlord's ACTUAL address, wherever that is in the world...

No need to apologise, clarity is the goal!

The s48 address has to be somewhere the landlord can be served notice, and most letting agents won't allow that in practice.
Try turning up to an agent's shop with a summons!

[jpucng62]

Thanks. In regards to keeping a record of rent income, i assume bank statements are enough? They pay me directly, so there arent any paper invoices or anything. I have a separate bank acc setup for all of it. Is this enough?

I would set yourself up a nice spreadsheet with all the incomes & expenditure on it, then you can keep that together with rent statements, invoices etc as a detailed set of accounts for HMRC should you ever need it. It will also allow you to enter the correct figures in HMRCs boxes when you'll in your tax return and identify which property is making / costing the most.

Good record keeping is a must in order to make your tax affairs clear.