Thriving BTL market increases landlord concern over higher tax charges

However, according to The Landlord Syndicate, a network of companies providing a complete support centre for landlords, record low interest rates and rising rental income could see some landlords hit with a higher tax bill than they may have anticipated.

In a recent survey carried out by Tax Insider, a member of The Landlord Syndicate, when asked what advice was most required, 52% of landlords stated they required greater tax saving tips.

Amer Siddiq, Managing Director of Tax Insider, says:

“Over the last few years, the buy-to-let market has grown substantially and with it, many landlords have been able to profit from the ever-increasing rental income and record low interest rates. 

"However, in a large percentage of cases, how much tax a landlord has to pay as a result of the size of their portfolio and having fewer outgoings to offset against tax, will be crucial to how profitable their investment really is.”

When asked what the greatest challenges were facing them in 2012, 40% of landlords said reducing their tax liability.

"HMRC has the powers to investigate a landlord’s affairs to ensure they are paying the correct tax, but according to Mr Siddiq, too many landlords pay an unnecessary tax bill due to poor record keeping, missing receipts, forgetting to claim expenses and even wrongly claiming expenses.

He says:

“It’s vital that landlords are knowledgeable about what offsetting opportunities are available to them. For example, most landlords are aware they can offset tax against their mortgage interest, rates and repairs.

"However, many fail to claim other costs such as travel to and from the property, advertising costs and phone calls, all of which may seem insignificant, but can certainly add up over the year.”