Property tax is a perpetual issue for landlords – most believe they are paying too much and many are continually looking at ways to make savings.

Although some controversial tax changes are on the way, such as changes to mortgage relief and wear and tear claims, too many unwary property investors fail to understand the basics and can slip up on making their returns to HM Revenue & Customs (HMRC).

HMRC has a policy of punishing careless mistakes and not waiving penalties for first-time offenders in a bid to make them concentrate more on record-keeping.

To help tax professionals, HMRC publishes a Property Income Toolkit that lists the most common errors property investors make on their tax returns and the areas HMRC look at for ‘risk’ in failing to make accurate reporting on income, gains or expenses.

The toolkit lists 27 check points for a buy to let tax return covering four ‘risk’ areas:

  • Property income
  • Accounting for capital and revenue expenses
  • Calculating reliefs and allowances
  • General business accounting

The checklist is a handy reckoner for checking the UK and overseas property and capital gains pages of a self-assessment tax return.

Alongside the checklist, the toolkit covers more detailed explanations of each point and includes links to more detailed technical reading in HMRC guidance for tax inspectors.

The current checklist covers the 2014-15 tax year, and other lists were published for earlier tax years. It’s important to use the correct checklist for each tax year as the rules do change.

Although the checklist highlights how tax inspectors view property tax returns, the information is HMRC’s interpretation of the law and has no legal standing. The guidance has faced many legal challenges and HMRC has suffered a number of losses at tax tribunals.

“The toolkit highlights the errors we most commonly see relating to property tax and is handy for anyone completing a tax return,”

said an HMRC spokesman.

“The details are based on our view of how the law should be applied and applying the law will depend on the circumstances of each specific case.”

Download the Property Tax Toolkit

Read HMRC technical guidance on property tax – but beware as the contents have not been updated since November 2014