TAX ON RENTAL INCOME ON A HOUSE IN UK

Discussion in 'Finance, Property, Law' started by fangy1, Feb 25, 2008.

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  1. I am in Germany with a house we rented out last year in Winchester for 1200 pcm.

    It is near the end of the tax year so I was expecting a Tax Return by now. Asking around, people who are also renting say they haven't had one in years and haven't paid anything.

    What is the score on this, does the taxman send you a return or are you meant to ask for one ? Will I get into trouble with the military auth if I don't ?

    Must admit I would consider holding on the cash until the HMRC contact me and ask for it - hopefully never !

    Your advice and experiences welcomed

    :?
     
  2. basically you have to declare it, if not the tax man could hit you hard.

    its assumed second income regardless where it comes from and therefore its taxable

    have done this myself, however as wife is chartered accountant she keeps me aware of what is happening

    cheers
     
  3. You need to complete your tax return form. They won't always send one to you especially if you have never declared the extra income yourself.

    Best bet is to get an accountant to do it, they will know all the regs and you will also be tax deductable for their services.
     
  4. If you are letting it through an agency then they are legally obliged to tell HMRC, A; It is being let. B;Whether it is furnished or not.

    You will not be sent a tax return as they don't know that you require one, the onus is on you to request a self assessment form, doing it online is very easy and I'm afraid that boat is already sailed for this year. Contact your local tax office, probably Glasgow :roll: and tell them of your situation and they will help you. If you do not tell them and they find out they will **** you, especially as you are employed by the MoD and by definition are an east target.

    You can offset the interest paid on the mortgage against it, as well as home insurance, any repairs, gas safety cert OR 10% of the rental income if it has been let furnished.
     
  5. Google is your friend


    And if you choose to ignore it and not bother then 'Comrade' Browns pet pick-pockets aka HMRC will start off with These Penaltys


    Just how it works when in BFG or whatever they call it these days I dont know, but I really cant see Brown missing a point here can you? I mean, he don't like us in the first place and we all pay UK tax where ever we are!!!






    Disclaimer ..... in no way should the above be classed as profesional tax advice cos:
    1. I'm no tax advisor.
    2. All links are from the Official 'Directgov' website as controlled by the Govt thereby subject to change at will to suit the whim of Brown and his trough feeders....
     
  6. oldbaldy

    oldbaldy LE Moderator Good Egg (charities)
    1. Battlefield Tours

    The boat has sailed for the year to April 2007, not this year.
     

  7. Ahem, that's what I meant! Well spotted!
     
  8. oldbaldy

    oldbaldy LE Moderator Good Egg (charities)
    1. Battlefield Tours

    I don't have to do it but being a 'kept man' I get the file the wife's :wink:
     
  9. One point: if you are letting your main residence whilst living in MQs, can you add in quartering charge as an offset on top of the mortgage, agency fees etc for tax purposes?

    In effect, quartering is a non-discretionary cost if you are on accompanied service...
     
  10. I'm certain that I answered a very similar question recently...

    No!

    Litotes
     
  11. What? Are you saying that you can claim this back against tax? Surely not!?
     
  12. Litotes,

    Assuming you are responding to me - yes you did reply to someone else two threads down.

    I expanded my post in a separate thread, but no response to that.

    In essence, I'm surprised that you are taxed on rental income whilst in MQ if you make an overall loss (as I do) by comparison with living in your own main residence (if you are making a net profit after your mortgage and MQ quartering charges are covered - then fair dos)
     

  13. If you are making a loss, you can offset your loss against your employment income, but for tax purposes the loss will be your income less direct expenses wear and tear (or capital allowances depending if it's furnished or not)

    Mortgage payments are not an expenses, only the interest on the mortgage
     
  14. Well, you'll only get taxed on any profit - not if you are making a loss.

    Do you mean that (MQ rent+mortgage) > rent received from tenants?

    If so, that's not really a loss, as you are getting the benefot of living in the MQ. If you were living in your home, then you'd be paying the full mortgage yourself. As it happens, you effectively have two houses, one of which you are living in and the other of which gets paid for (and lived in) by someone else.

    On the other hand, if you get less rent from your house than the cost of the mortgage, you have made a loss and no tax is payable.
     
  15. Slim Jim adds some more useful info than I did.

    The interest is an expense - obviously the repayment element isn't as that is cash that is coming straight off the amount you owe the bank.