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Income from property

This section can be found in the data input tab within the tax return and is used for entering income from UK property and income from UK and EEA Furnished Holiday Lets. There is a separate section for foreign property income

When entering property income you can choose to enter each property into a separate section, or you can place all properties of a particular type into the same section. Taxfiler will aggregate the results for the tax return form.

How is relief given for residential finance costs?  

From 2020/21 tax year relief for finance costs is no longer available as a deductible expense against rental income. Instead a tax reduction @ 20% is given to reduce the income tax liability. 

The tax reduction is the lower of: 

  • Property profit after deducting losses brought forward and 
  • Adjusted total income that exceeds the personal allowance – this is income after losses and reliefs BUT excluding savings and dividends income. 

Any finance costs unrelieved in this way is carried forward to subsequent tax years. 

Details of property

  • Is this a furnished holiday let? – tick if the property is a furnished holiday let. Further information is available in HMRC Helpsheet 253.
  • Claim Rent a Room relief? – tick if the property is eligible for the Rent a Room exemption. The Rent a Room scheme is described in HMRC Helpsheet 223.
  • Number of properties rented out – if you are aggregating several properties for entry into the screen, enter the number of properties. If you are entering each property separately then leave this field containing the value “1” and Taxfiler will add the properties together when updating the form.
  • Property income ceased in year? – tick this box if the property income has ceased during the year.
  • Country (if Furnished Holiday Let in EEA) – this field is only applicable for Furnished Holiday Lets. If the FHL is in the European Economic Area enter the name of the country. The EEA comprises the 28 states in the European Union (EU) plus Iceland, Liechtenstein and Norway. Note that Taxfiler will NOT validate that the country entered is an EEA country. If there are FHL properties in both the UK and EEA then you must fill out a separate property section for each. Taxfiler will duplicate the first page of Form SA105 and fill in the first with details of UK properties and the second with details of EEA properties.
  • Address of property – click ‘Change address‘ to enter the address of the property if desired. This is not required for the form but may be useful for identifying properties and will appear on any detailed schedules that are printed.
  • Period of grace election? – if a property qualified as an FHL property in the previous year but does not reach the occupation threshold this year, tick the box.

Joint lettings

  • ‘Is property let jointly?‘ Tick the box if the property is let jointly.
  • ‘Name of record keeper‘ Enter the name of the record keeper for jointly let properties. Taxfiler will include this information in the additional information area of the tax return as required by HMRC. This field is required if the property is let jointly.
  • ‘Address of record keeper‘ Enter the address of the record keeper for jointly let properties. Taxfiler will include this information in the additional information area of the tax return as required by HMRC. This field is required if the property is let jointly.

For properties that are let jointly, enter only the tax payer’s share of income and expenses in the remaining fields of this page.

Accounting method

  • ‘How are income and expenses calculated?’ Select from the two options in the drop down list. Accruals (traditional) basis or Cash basis

Income

  • ‘Rents and other income from property’ Enter the tax payer’s share of income from the property or properties included. For non-resident landlords this should be the gross income before deduction of tax.
  • ‘Tax taken off (non-resident landlords)’ Enter the tax payer’s share of any tax taken off the income.
  • ‘Premiums for the grant of a lease’ Enter the tax payer’s share of the amount taxable to income for premiums. The premium chargeable is equal to Premium paid x (50 – years) ÷ 50, where years is the number of complete 12-month periods of the lease ignoring the first 12 months.
  • ‘Reverse premiums and inducements’ Enter the tax payer’s share of any reverse premiums.

Property Income Allowance (up to £ 1,000)

No other allowance may be claimed against any other properties this year

  • ‘Claim relief against property income?’ tick the box if you wish to claim property income relief for additional information refer to HMRC guide

Expenses

Expenses are not applicable where the Rent a Room scheme is being used, or if you claim the property income allowance. Enter the taxpayers share (where jointly let) expenses in the applicable fields below

  • ‘Rent, rates, insurance, ground rents etc‘
  • ‘Repairs, maintenance and renewals‘
  • ‘Loan interest and other financial costs (non-residential properties)’
  • ‘Legal, management and professional fees’
  • ‘Costs of services provided, including wages’
  • ‘Other allowable expenses’

Residential property finance costs

  • ‘Interest etc on residential properties’ enter the full value of interest paid on the property, Taxfiler will calculate the portion that makes up the allowable expense, and display it in the field below
  • Allowable as an expense (75% of costs in 2018, 50% of costs in 2019, 25% of costs in 2020, and 0% of costs in 2021)
  • Unused residential finance costs b/fwd

Individuals will be able to claim a basic rate tax reduction from their Income Tax liability on the portion of finance costs not deducted in calculating the profit. In practice this tax reduction will be calculated as 20% of the lower of the:

  • finance costs not deducted from income in the tax year (25% for 2017 to 2018, 50% for 2018 to 2019, 75% for 2019 to 2020 and 100% thereafter)
  • profits of the property business in the tax year
  • total income (excluding savings income and dividend income) that exceeds the personal allowance and blind person’s allowance in the tax year

Any excess finance costs may be carried forward to following years if the tax reduction has been limited to 20% of the profits of the property business in the tax year. If the property has made a loss you will not receive a tax deduction. For additional information please see GOV.UK

Adjustments and allowances

Where the Rent a Room scheme is being used, the only adjustment applicable is the Rent a Room exempt amount. Complete the fields below if applicable refer to HMRC guide for additional information

  • ‘Private use adjustment’
  • ‘Balancing charges‘
  • ‘Annual Investment Allowance‘
  • ‘Zero-emission goods vehicle allowance’
  • ‘All other capital allowances‘
  • ‘Costs of replacing domestic items in residential lettings’
  • ‘Rent a Room exempt amount’ For properties under the Rent a Room scheme, this field will be automatically completed with the Rent a Room exemption. If the room is let jointly then the exemption will be halved.
  • ‘Adjusted profit/(loss) for the year’ This field will show the calculated profit or loss for the property, before any brought forward losses.

Calculate taxable profit or loss

  • ‘Loss brought forward‘ Enter any unused losses brought forward from the previous year.
  • ‘Loss brought forward used against profits’ Taxfiler will allocate the maximum applicable loss to the profits for the year.
  • ‘Taxable profit for the year‘ Shows the taxable profit for the year, after taking into account losses brought forward.
  • ‘Loss set off against total income’ Enter the amount of any agricultural expenses or capital allowance excess that is to be allocated against other income. From 2013–14 there is a further limit on the amount of Income Tax relief that an individual may claim for deduction from their total income in a tax year. See HMRC Helpsheet 204  for further information.
  • ‘Loss to carry forward’ Will show the losses to be carried forward.