Letting agents and tenants pay any withholding tax to HMRC quarterly. This means at the end of June, September, December and March.
To work out how much tax to pay:
- Add up any rent paid, or any rent the landlord had requested be paid to someone else
- Take away any expenses paid for the landlord, such as repairs
- Multiply the figure that remains by the basic rate of tax - 20% for the 2015-16 and 2016-17 tax years.
Amanda pays her landlord £1,250 a month rent between April and June 2016. During that time she also pays £350 for insurance and £150 in plumbing repairs for her landlord.
- Her rent was £1,250x 3 months = £3,750
- Deductible expenses were £500
- The taxable amount is £3,750 - £500 = £3,250
- The tax due is £3,250 x 20% = £650