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  • FIRST POST
    • funnymonkey
    • By funnymonkey 19th May 17, 9:57 AM
    • 45Posts
    • 2Thanks
    funnymonkey
    BTL how to calculate tax on profit and income?
    • #1
    • 19th May 17, 9:57 AM
    BTL how to calculate tax on profit and income? 19th May 17 at 9:57 AM
    Can anyone help.me please?
    I with the new rules being phased in over the next 4 years how do you calculate your profit and btl income for taxation purposes as you can't be taxed both?
    Thank you
Page 1
    • 00ec25
    • By 00ec25 19th May 17, 10:13 AM
    • 4,286 Posts
    • 3,620 Thanks
    00ec25
    • #2
    • 19th May 17, 10:13 AM
    • #2
    • 19th May 17, 10:13 AM
    how do you calculate your profit and btl income for taxation purposes
    Originally posted by funnymonkey
    by reading the guide?

    https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

    https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies
    • funnymonkey
    • By funnymonkey 19th May 17, 11:59 AM
    • 45 Posts
    • 2 Thanks
    funnymonkey
    • #3
    • 19th May 17, 11:59 AM
    • #3
    • 19th May 17, 11:59 AM
    Thank you for your reply but it doesn't help me as I understand these individually but I don't understand how to work out my tax when say for example I make 5 thousand profit.
    Now your being rated on the full rental.income do you just pay tax on that and ignore the profit.
    If you paid tax on the rental.income and the profit you would effectively being taxed twice for the same thing.
    • movilogo
    • By movilogo 19th May 17, 12:06 PM
    • 2,256 Posts
    • 1,531 Thanks
    movilogo
    • #4
    • 19th May 17, 12:06 PM
    • #4
    • 19th May 17, 12:06 PM
    If you paid tax on the rental.income and the profit you would effectively being taxed twice for the same thing.
    Effectively under new rule, rental income is the profit. So you pay tax on this.

    Your taxable rental income is = Rent - allowable expenses but not interest payment
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
    • elverson
    • By elverson 19th May 17, 1:01 PM
    • 586 Posts
    • 342 Thanks
    elverson
    • #5
    • 19th May 17, 1:01 PM
    • #5
    • 19th May 17, 1:01 PM
    If you can't work this out you shouldn't be a landlord tbh.
    • Crashy Time
    • By Crashy Time 19th May 17, 1:13 PM
    • 4,391 Posts
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    Crashy Time
    • #6
    • 19th May 17, 1:13 PM
    • #6
    • 19th May 17, 1:13 PM
    http://www.mortgagesforbusiness.co.uk/news-insight/2015/july/how-the-restriction-of-relief-on-btl-mortgage-interest-will-affect-landlords/
    • buglawton
    • By buglawton 19th May 17, 1:43 PM
    • 6,793 Posts
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    buglawton
    • #7
    • 19th May 17, 1:43 PM
    • #7
    • 19th May 17, 1:43 PM
    If you can't work this out you shouldn't be a landlord tbh.
    Originally posted by elverson
    Just get a bookkeeper to do it all for you and put the cost of the bookkeeper into the costs. Ignore the snobs who think BTL is only for the elites, it's for any well funded person who wants alternatives to invest in for a future where the state (cue May) wants to slash support for the elderly.

    Just make sure you collect all receipts and record all BTL-related mileage.

    Rules changed not only about interest but also the 10% furnished allowance is replaced by real costs. I now collect all receipts and will probably be booking more that 10% due to some appliance replacements and repairs, not to mention mileage during the refurbs.

    The 10% on furnished BTLs was introduced to cut the cots of tax collection by hugely simplifying the process. Thanks to Cameron we're now going full circle.
    • Crashy Time
    • By Crashy Time 19th May 17, 1:46 PM
    • 4,391 Posts
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    Crashy Time
    • #8
    • 19th May 17, 1:46 PM
    • #8
    • 19th May 17, 1:46 PM
    Just get a bookkeeper to do it all for you and put the cost of the bookkeeper into the costs. Ignore the snobs who think BTL is only for the elites, it's for any well funded person who wants alternatives to invest in for a future where the state (cue May) wants to slash support for the elderly.

    Just make sure you collect all receipts and record all BTL-related mileage.

    Rules changed not only about interest but also the 10% furnished allowance is replaced by real costs. I now collect all receipts and will probably be booking more that 10% due to some appliance replacements and repairs, not to mention mileage during the refurbs.

    The 10% on furnished BTLs was introduced to cut the cots of tax collection by hugely simplifying the process. Thanks to Cameron we're now going full circle.
    Originally posted by buglawton

    The reality is that BTL was becoming a "thing" for nearly half the adult population, most without any financial savvy, and based on lending that doesn`t stack up if house prices drop? That is why the government want to shut this circus down.
    • 00ec25
    • By 00ec25 19th May 17, 7:02 PM
    • 4,286 Posts
    • 3,620 Thanks
    00ec25
    • #9
    • 19th May 17, 7:02 PM
    • #9
    • 19th May 17, 7:02 PM
    Thank you for your reply but it doesn't help me as I understand these individually but I don't understand how to work out my tax when say for example I make 5 thousand profit.
    Now your being rated on the full rental.income do you just pay tax on that and ignore the profit.
    If you paid tax on the rental.income and the profit you would effectively being taxed twice for the same thing.
    Originally posted by funnymonkey
    I am sorry but if you really cannot follow the very dumbed down level at which the info on the .Gov.UK website is now presented then pay a professional accounts person to help you

    i am not going to write it all out for you when it is there to be read, I can only assume you want to be spoon fed since you can obviously read.

    What do you not understand about case study 1, showing the position pre and post the rule change?
    Last edited by 00ec25; 19-05-2017 at 7:05 PM.
    • Crashy Time
    • By Crashy Time 19th May 17, 7:13 PM
    • 4,391 Posts
    • 2,020 Thanks
    Crashy Time
    http://www.telegraph.co.uk/property/buy/buy-to-let-calculator-how-will-new-tax-reduce-your-profit/
    • buglawton
    • By buglawton 19th May 17, 10:08 PM
    • 6,793 Posts
    • 2,996 Thanks
    buglawton
    The reality is that BTL was becoming a "thing" for nearly half the adult population, most without any financial savvy, and based on lending that doesn`t stack up if house prices drop? That is why the government want to shut this circus down.
    Originally posted by Crashy Time
    It's been such an unsuccessful 'thing' that the govt needs to pass special budgetary measures to shut it down?

    But the number of people popping up to say that it's only for the 'experts' isn't going down, for sure.
    • buglawton
    • By buglawton 19th May 17, 10:12 PM
    • 6,793 Posts
    • 2,996 Thanks
    buglawton
    I am sorry but if you really cannot follow the very dumbed down level at which the info on the .Gov.UK website is now presented then pay a professional accounts person to help you

    i am not going to write it all out for you when it is there to be read, I can only assume you want to be spoon fed since you can obviously read.

    What do you not understand about case study 1, showing the position pre and post the rule change?
    Originally posted by 00ec25
    Personally, I have no issues filling in the online tax forms. Been doing it for over 10 years on other more complex businesses than BTL. However, if you read the post sequence really carefully you'll note that I was offering advice to OP, not to myself.

    In fact I gave same advice to OP that I'd give my nearest & dearest on the event of my passing away.

    Anyway, don't break a leg getting off that high horse.
    • lovinituk
    • By lovinituk 19th May 17, 10:16 PM
    • 5,334 Posts
    • 5,971 Thanks
    lovinituk
    Personally, I have no issues filling in the online tax forms. Been doing it for over 10 years on other more complex businesses than BTL. However, if you read the post sequence really carefully you'll note that I was offering advice to OP, not to myself.

    In fact I gave same advice to OP that I'd give my nearest & dearest on the event of my passing away.

    Anyway, don't break a leg getting off that high horse.
    Originally posted by buglawton
    And if you read the post carefully you will see he wasn't talking to you
    The following is my forum signature and not necessarily a response to your post:
    "To be truly successful you must live a few years of your life like others won’t so you may live the rest of your life like others can’t"
    • 00ec25
    • By 00ec25 19th May 17, 10:23 PM
    • 4,286 Posts
    • 3,620 Thanks
    00ec25
    Personally, I have no issues filling in the online tax forms. Been doing it for over 10 years on other more complex businesses than BTL. However, if you read the post sequence really carefully you'll note that I was offering advice to OP, not to myself.

    In fact I gave same advice to OP that I'd give my nearest & dearest on the event of my passing away.

    Anyway, don't break a leg getting off that high horse.
    Originally posted by buglawton
    ?

    given I quoted the OP, I fail to see what you are on your high horse about

    by definition OP must be a LL, otherwise why ask the question to start with. A LL who does not know how to calculate their own tax, (as you attest in respect of yourself) and moreover one who cannot look up basic facts readily available on the interwebnetthingy, is one who should be paying for professional support.

    The info is readily available, and not that difficult to grasp, since the only thing which has changed is the treatment of the interest, and that is fully explained in the case studies already linked to. I have also invited OP to post what it is they do not understand about the facts of how tax works which they can read for themselves.
    Last edited by 00ec25; 20-05-2017 at 12:12 AM.
    • Crashy Time
    • By Crashy Time 19th May 17, 10:23 PM
    • 4,391 Posts
    • 2,020 Thanks
    Crashy Time
    It's been such an unsuccessful 'thing' that the govt needs to pass special budgetary measures to shut it down?

    But the number of people popping up to say that it's only for the 'experts' isn't going down, for sure.
    Originally posted by buglawton

    It worked while the banks had their property Ponzi running at full steam ahead, and people believed that "You can`t go wrong with bricks and mortar!" it meant that someone with an existing residential mortgage could be in the market for one or even two more property loans...Great! Bonus all round! What could possibly go wrong? Well a collapse in the Ponzi requiring the lowest interest rates in history plus endless QE (that has not really worked too well) could go wrong, plus half the population getting so peed off with not being able to afford a decent home that they voted for Brexit. It was "successful" in getting loads more property backed credit out to the masses, but that isn`t the kind of "success" that attracts votes any more, so we are seeing the reversal of the policy that`s all.
    • nubbins
    • By nubbins 19th May 17, 10:26 PM
    • 680 Posts
    • 914 Thanks
    nubbins
    Here you go

    www.themortgageworks.co.uk/includes/xls/T1036_11_16.xlsx
    • lovinituk
    • By lovinituk 19th May 17, 10:48 PM
    • 5,334 Posts
    • 5,971 Thanks
    lovinituk
    Read carefully and you'll note that I was replying to 00ec25 and not to your good self.
    Originally posted by buglawton
    You just quoted 00ec25s post! You seem to be having problems following this thread
    The following is my forum signature and not necessarily a response to your post:
    "To be truly successful you must live a few years of your life like others won’t so you may live the rest of your life like others can’t"
    • buglawton
    • By buglawton 19th May 17, 10:50 PM
    • 6,793 Posts
    • 2,996 Thanks
    buglawton
    I'm being a paranoid android but don't accept xlsx files from strangers unless you open in read only mode with macros disabled.
    • buglawton
    • By buglawton 19th May 17, 10:52 PM
    • 6,793 Posts
    • 2,996 Thanks
    buglawton
    You just quoted 00ec25s post! You seem to be having problems following this thread
    Originally posted by lovinituk
    Yeah Crashy and 00ec25s what a pair, will tidy up!
    • buglawton
    • By buglawton 19th May 17, 10:54 PM
    • 6,793 Posts
    • 2,996 Thanks
    buglawton
    ?

    given I quoted the OP, I fail to see what you are on your high horse about

    by definition OP must be a LL, otherwise why ask the question to start with. A LL who does not know how to calculate their own tax, (as you attest in respect of yourself) and moreover one who cannot look you basic facts readily available on the interwebnetthingy, is one who should be paying for professional support.

    The info is readily available, and not that difficult to grasp, since the only thing which has changed is the treatment of the interest, and that is fully explained in the case studies already linked to. I have also invited OP to post what it is they do not understand about the facts of how tax works which they can read for themselves.
    Originally posted by 00ec25
    So let's say you are good artist who sells their work but hopeless at tax returns, Or a good builder who is busy but hopeless at tax returns. They should give up doing art/building?

    edit: Now I think about it, I do know a BTL landlady in London who lives in a shared house, has just a room to herself, but rents out her BTL to augment her low income. She gets all her tax done by an accountant. Works for her.
    Last edited by buglawton; 19-05-2017 at 10:56 PM.
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