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International Association of Bookkeepers

Here Are The Changes To Landlord Tax 2020/21 You Will Need To Know

For landlords, change is familiar. Almost every tax year, new legislation is introduced that impacts their finances – and this year is no different.

In order to restart the economy, Chancellor Rishi Sunak has already introduced a couple of changes that are likely to affect property investors. We’ve asked Mike Parkes from GoSimpleTax to break down the new legislation in terms we understand.

Cuts to Stamp Duty

All homebuyers are to be supported in their hopes of buying a new property. This includes landlords, although they’ll still be expected to pay a little more.

Specifically, Stamp Duty will be cut for homebuyers, but remain the same for those looking to purchase rental property or second homes. This change came into effect on 8th July 2020, and will remain in legislation until 31st March 2021.

For those buying a main home, the Stamp Duty rate will now be zero for properties valued up to £500,000. While this does benefit those looking to purchase a second home, your clients will still be expected to pay the additional 3% surcharge on each bracket they make, as can be seen below:

Property value                        Homeowner Stamp Duty rate            Landlord Stamp Duty rate

 Up to £500,000                      0%                                                      3%
£500,001 to £925,000          5%                                                      8%
£925,001 to £1.5 million       10%                                                    13%
Above £1.5 million                12%                                                    15%

Changes to reporting on Capital Gains Tax

Capital Gains Tax (CGT) is a tax on the gain made when you sell (or dispose of) an asset that has increased in value. The reason for the term ‘dispose of’ is to cover those who would attempt to give an asset away as a gift or compensation.

You pay CGT on all manner of assets. However, in relation to property, it includes the following:

  • A property that you’ve not used as your main home
  • A holiday home
  • A property which you let out for people to live in
  • A property that you’ve inherited and not used as your main home

According to the legislation brought in on 1st April 2020, your client now only has 30 days to declare the sale to HMRC. Should they miss this deadline, they may receive a penalty as well as interest on what they owe.

Consider filing now

As a landlord, your client is required to submit their rental earnings through their January Self Assessment tax return. This year, there’s all the more reason to submit early and get a complete understanding of their 2020/21 tax bill – and ease your burden in January!

Knowing their obligations ahead of time will allow you to inform them of their budgets and not make any further investments that they may not be able to maintain.

And remember that filing early does not mean paying early. It simply means that you can work out their tax liability ahead of the deadline. You’ll still have up until midnight on 31st January to pay the tax they owe.

About GoSimpleTax

 Landlords GoSimpleTax software submits directly to HMRC and is the solution you need to log all your rental income and property expenses, by adding each property owned separately under one account allowing for a clear picture of your income and expenses.

The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

IAB members receive a 10% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.

Further more, IAB members who sign up to try the software throughout August 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now




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