TAX ON RENTAL INCOME ON A HOUSE IN UK

#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

How Self Assessment works
Most people pay tax on their earnings or pensions through PAYE (Pay As You Earn). Under PAYE the employer or pension provider deducts tax on behalf of HMRC, and you don't usually get a Self Assessment tax return.

But if you're not on PAYE, and/or are due to pay additional tax because of other income not taxed through PAYE (for example from property or investments above a certain amount, or because you're self-employed) you have to account for this income through Self Assessment. HMRC uses the figures you supply on the tax return to work out your tax bill, or you can work it out yourself.

It's called 'Self Assessment' because you're responsible for making sure the details you provide are right.

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....
 

oldbaldy

LE
Moderator
#6
VerminWA said:
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.
The boat has sailed for the year to April 2007, not this year.
 
#7
oldbaldy said:
VerminWA said:
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.
The boat has sailed for the year to April 2007, not this year.

Ahem, that's what I meant! Well spotted!
 

oldbaldy

LE
Moderator
#8
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...
 
#11
Mediaeval said:
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...
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
Mediaeval said:
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)

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
Mediaeval said:
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)
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.
 
#16
clownbasher said:
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.
*Bows* :lol:

Here's a breif guided to rental income,

Clicky!

if you don't know what you're doing it may pay to get an accountant, couple of reasons, you can be sure it's done right and there may be expenses benefits you might might be missing out on.
 
#17
Also offset any income against a myriad of other incidental expenses such as: window cleaning, gardening, visits to the property (2 per year), including hotel costs, fuel etc.

Also be aware that if the property is in joint names. i.e. you and spouse, any profit is halved. This is important if your wife is with you in Germany and a not tax payer.

With a little imagination any profit can be cut to a minimum. Whilst doing your return online is easy enough, the self assessment form isn't too bad either as the property bit is about the last 3 pages. Pay type info (P60 etc.) you can get from your pay statements or ArmyNet.

Alternatively, engage the services of an accountant. With all the other hassles of Army life, poring over you tax return may just push you over the edge if it isn't your thing! Send all your info to your accountant, open the, fridge, reach out another Warsteiner and relax!

Details for the tax office are below. Give them a ring and they will send you a tax return. It is always a bit hard to swallow declaring to the tax man your booty, but better do do it sooner rather than later! Otherwise, he will not even have the decency to give you a reach around when he gives you a dry one later on! HMF = easy pickings! Just ask the boys about the CSA!

Army tax office is at:

Members of HM Armed Forces and other Crown Servants are dealt with by HMIT Public Department 1 and South Wales Area office. The addresses are:

South Wales Area office
Ty Glas Road
Llanishen
Cardiff
CF14 5YA

Telephone: 029 20325363
Fax: 029 20325957

And no...I'm not an acountant!
 
#18
Thanks Clownbasher:

Yes - I do mean that MQ rent + agent + mortgage > rental income.

Problem is that I am almost mortgage free - if living in my own home I would not be liable for the MQ, so the difference would be going into my bank account.

The rental income still leaves me about £100pm worse off than if I lived in my own house.

I suspect that the other options are to put all in my wifes name or increase the mortgage - probably time for some professional advice....
 

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