As a landlord in the UK, if you wish to maximise your returns, you will need to consider the various schemes that are available. If you can understand these schemes, you can reach your financial goals without experiencing hassles of any type. So, here, we will be taking a look at some of the schemes and how they can benefit you both in the long and short run.
Rent-a-Room
This is a scheme that can come in handy if you are renting out a room or multiple of them. By opting for this scheme, you can get up to £7,500 tax-free per year. Thus, if you are looking for extra income as a homeowner, this is the best scheme for you since you can save a lot on taxes.
Wear and Tear Allowance Replacement
This is the second scheme that you need to look for if you are looking to save taxes. Here, if you are a landlord, you can claim an allowance on wear and tear for the properties that you furnish. At present, this scheme is popularly known as ‘Replacement of Domestic Items Relief’ where you can claim tax relief for the cost of replacing various items. This includes appliances, furniture, and other domestic items used in places that you rented out. However, to claim tax relief, you need to keep records of the purchases that you have made and those that you have replaced.
Save Tax Through Property Expenses
Another way to save taxes as a landlord is to maintain records of the allowable expenses on the property that you have rented out. Starting from the maintenance of your property to mortgage interest, management fees and insurance, you will need to consider all of them.
By deducting these expenses from the income that you get from your rent, you can reduce your taxes.
Private Residence Relief
As a landlord, if and when you sell your property, you will need to pay capital gains tax, also known as CGT. To reduce this, you can opt for this scheme, also known as PRR. However, your claim will only be successful if you classify your property as your primary residence. Also, this will be considered by the number of days your property was your main home.
Reduction of CGT on Jointly Owned Properties
You can claim a reduction of CGT if you have a jointly owned property. However, this scheme will only be considered if you own the property with your spouse.
Apart from the ones we mentioned, there are other schemes as well. But these are some of the most common ones that will benefit you as a landlord.
Let us Assist You with Tax Savings Schemes
If you want to know more about the tax savings schemes that we mentioned or get assistance with it as a landlord, book an appointment with us today by giving us a call or sending us an email.
