What are my tax concerns as a student landlord?

Many see becoming a student landlord as a ‘get-rich-quick scheme’. However, it’s certainly not as simple as just buying a house, having students move in, and the profits appearing. There are numerous factors to consider, from safety regulations to the eviction process. One of the key questions you should definitely be asking is: ‘what are my tax concerns as a student landlord?’.

To be aware of the amount due, and also how you can maximise profits, you’ll need to consider various taxes. Read on as we break each of them down.

The types of tax to pay

When first asking ‘what are my tax concerns as a student landlord?’, you may question why you would need to. Letting a property may not seem like running a company, but it is considered a rental business. For this reason, it’s probable that you’ll need to complete a Self Assessment tax return. HMRC will ask you to report your profits if your income is £2,500-£9,999 after allowable expenses, or £10,000 or above before allowable expenses.

If you generate profits from any student properties, you’ll need to pay tax on these. The amount of tax due on rental income will depend upon the total profit made, and your overall income. This will take into account other revenue streams, such as wages or pensions. If you own multiple properties, then the income and expenditure from each will need to be combined, to conclude an overall profit or loss.

There’s also Stamp Duty Land Tax to pay, if the property you purchase costs over £125,000 in England or Northern Ireland. The amount due will depend on whether you’re a first-time buyer or buying multiple properties. If the property is in Scotland or Wales, then the tax to pay will be Land and Buildings Transaction Tax or Land Transaction Tax respectively.

Maximising your profits

There are numerous expenses that can be offset against your rental income to reduce the amount of tax you pay. This is providing that they are incurred wholly and exclusively for the purposes of running the student landlord business. These can include typical maintenance and repair costs, such as fixing gas leaks and electrical faults, and treating damp. You can find a full list of allowable expenses on the GOV.UK website.

You can also claim on 75% of your mortgage interest, receiving a basic rate tax reduction on 25%. However, by 2020/21, this cost will no longer be allowed to be deducted from the rental income – this restriction will be phased in gradually.

How SimpleTax software can help

We hope we’ve answered the question ‘what are my tax concerns as a student landlord?’ for you. However, with numerous taxes to pay and expenses to offset, it can be complicated to calculate the amount of tax you need to pay and take advantage of the relief you’re entitled to.

We’ve done all the hard work, so you don’t have to. SimpleTax automatically adjusts your tax calculations when you update your income and expenses, ensuring an accurate report in real time. It also enables you to submit your SA105 Self Assessment for UK student property.

Our software has plenty of other beneficial features too. If you’d like to see them in action, try a 14-day free trial of the cloud-based software today.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.