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Didn't declare tax on rental income

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  • brasso
    brasso Posts: 795
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    I didn't think to notify the IR for a couple of years in this situation, and had no problem. I didn't buy as BTL -- it was a flat I lived in for some years, then kept on after getting married and moving into my wife's house.

    Although part of me was a little reluctant to tell the IR, I'm glad I did. Partly because the anxiety I felt about them finding out, just vanished overnight, and partly because it was much less expensive than I thought. There are loads of expenses you can claim against the income, and in fact I haven't had to pay anything yet to the IR because I've spent more on maintaining the property, servicing the legal requirements, and travelling to visit the property (we've ended up living a long way from it), than I've received in rent.

    The IR have been helpful and even pleasant about it. Definitely tell them. If you don't, when they catch up with you, you'll wish you had!
    "I don't mind if a chap talks rot. But I really must draw the line at utter rot." - PG Wodehouse
  • silvercar
    silvercar Posts: 46,865
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    https://www.hmrc.gov.uk/findout links to information on registering for landlords.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • I've just read Saturday's money section in the Guardian and didn't realise previously I ought to pay tax on my flat rental income if I wasn't profiting from it, now I'm not sure.

    I'm not a proper landlord, I just started renting out my flat when I moved in with my partner as I didn't want to sell it immediately.

    I don't make a penny from renting it out, in fact once I've paid the mortgage and the the ground rent/ service charges, I'm actually out of pocket. Even more so if I have to do repairs etc.

    Will I still have to pay tax even in this situation?

    Thanks
  • silvercar
    silvercar Posts: 46,865
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    I've just read Saturday's money section in the Guardian and didn't realise previously I ought to pay tax on my flat rental income if I wasn't profiting from it, now I'm not sure.

    I'm not a proper landlord, I just started renting out my flat when I moved in with my partner as I didn't want to sell it immediately.

    I don't make a penny from renting it out, in fact once I've paid the mortgage and the the ground rent/ service charges, I'm actually out of pocket. Even more so if I have to do repairs etc.

    Will I still have to pay tax even in this situation?

    Thanks

    If the mortgage interest and other expenses exceeds the rental income then you will declare a loss on your tax return and carry that loss forward to future years. You can't put that loss against earned income but you can carry it forward until such a time as you would be making a profit.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Cissi
    Cissi Posts: 1,131 Forumite
    I've just read Saturday's money section in the Guardian and didn't realise previously I ought to pay tax on my flat rental income if I wasn't profiting from it, now I'm not sure.

    I'm not a proper landlord, I just started renting out my flat when I moved in with my partner as I didn't want to sell it immediately.

    I don't make a penny from renting it out, in fact once I've paid the mortgage and the the ground rent/ service charges, I'm actually out of pocket. Even more so if I have to do repairs etc.

    Will I still have to pay tax even in this situation?

    Thanks

    You still have to fill out a tax return, but if the rent doesn't cover the interest part of your mortgage, service charges and repair costs then there won't be any tax to pay. Any mortgage capital repayment would still be taxable though.
  • pennine
    pennine Posts: 83
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    Is a hip pack classed as an allowable expense ? The only info I have found on allowable expenses seem to be out of date, before hips were introduced. I'm not sure if I needed a hip or EPC in place before I rented out my property ?
  • ManicMum
    ManicMum Posts: 845 Forumite
    I've got 2 mates who don't declare and one has several properties. It makes me mad as I am honest but what can you do? Their lookout. One says they don't care and the other says they don't bother with such things. In all other ways they are decent people and their attitude does surprise me. There must be loads of people out there doing the same.
  • Thanks guys thats really helpful. I actually just gave them a ring and they said if the profit I make once I deduct interest payments and service charges etc. from the rent doesn't exceed £2500 then I just have to write to them with a few details - no forms to be completed.

    I probably just make a profit if the repayment part of the mortgage is taken away, but definitely not enough to exceed this figure - so I'm going to do as they suggested.

    It's good to know I'm doing the right thing by the law but not getting stung when I'm not profiting!
  • Fire_Fox
    Fire_Fox Posts: 26,026
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    I've just read Saturday's money section in the Guardian and didn't realise previously I ought to pay tax on my flat rental income if I wasn't profiting from it, now I'm not sure.

    I'm not a proper landlord, I just started renting out my flat when I moved in with my partner as I didn't want to sell it immediately.

    I don't make a penny from renting it out, in fact once I've paid the mortgage and the the ground rent/ service charges, I'm actually out of pocket. Even more so if I have to do repairs etc.

    Will I still have to pay tax even in this situation?

    Thanks

    You need to register for income tax even if you don't actually pay any. If you are letting your flat you are a proper landlord in the eyes of the law, this means your tenants have rights and you have responsibilities towards them. I hope you have all the right safety certificates in place, the damage deposit is lodged in a scheme, you have landlord's insurance and consent to lease from your lender?
    Declutterbug-in-progress.⭐️⭐️⭐️ ⭐️⭐️
  • N79
    N79 Posts: 2,615 Forumite
    I'm not a proper landlord, I just started renting out my flat when I moved in with my partner as I didn't want to sell it immediately.

    Can I just take exception to this statement? You are a "proper" LL.
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