Tax question

CEON44 · 7 July 2015 at 2:22PM

I have recently started renting out a property I own and I was wondering how it will be taxed next April. I currently live in my own home but own a separate property which was started to be let out from Monday April 6th. I am retired on a small pension, not the state pension, and have no other income. My pension totals about £150 per week and the house brings in £110 per week although there are expenses such as rates and other repairs etc etc. Will the pension and rent be added together next April and taxed from that total figure, or is the rental money considered different, ie capital gains??? Any advice appreciated

ballyblack · 7 July 2015 at 2:23PM

Rental money is Income

qwert_yuiop · 7 July 2015 at 3:24PM

ballyblack wrote: »

Rental money is Income

Of course it is. Rates, interest payments and some other expenses are subtracted of course to give a gross profit figure to add to the pension income for tax calculation.

irishjohn · 7 July 2015 at 5:58PM

Make sure you have receipts for every penny you spend on the house you let out and any fees incurred to let it out. You will then need to fill in a tax form after next April to show your private pension income, your rental income and any expenses you incur. Pension plus income minus expenses will give the taxable amount you earn for the year and by doing it on line you can calculate what your tax bill will be.

CEON44 · 7 July 2015 at 6:45PM

irishjohn wrote: »

Make sure you have receipts for every penny you spend on the house you let out and any fees incurred to let it out. You will then need to fill in a tax form after next April to show your private pension income, your rental income and any expenses you incur. Pension plus income minus expenses will give the taxable amount you earn for the year and by doing it on line you can calculate what your tax bill will be.

So this is "self assessment" and can be done easily online? Sorry for my ignorance. Always been under PAYE before and had tax all done by employers

thetope · 7 July 2015 at 8:05PM

Gosh we're a nice bunch! Yes, you will need to register for self assessment. https://www.gov.uk/register-for-self-assessment/overview - you can register anytime and I'd recommend doing it a while before you need to, as some of the passwords and user details will come through the post. You'll need to keep all the login details and password somewhere safe as you will need to use them all again every year.

The online system is reasonably easy to negotiate, it's like a questionnaire which you methodically progress through and based on your responses it will skip parts of the form that may not be relevant. You can also save it and come back to it if you find it a bit intimidating in one go. You will have to disclose your pension income. There is a supplementary worksheet on which you can work out all the various items you can deduct from your annual income as expenses (e.g. rates, insurance, ground rent, etc.) The good news is that by the sounds of it, you will hopefully only have to pay a small amount of tax, if any, as the personal allowance is £10,600 and you'll only be taxed 20% on your income over and above that amount. As from what you've said your gross income appears to be around £13,500 (which will reduce once you factor in your rental expenses) you may find the tax is only a few hundred pounds.

Make sure you've registered with the landlord registration scheme and if you've got any gas appliances, get a gas safe engineer to certify them.

CEON44 · 7 July 2015 at 8:43PM

tara747 wrote: »

^^^ Is this the average NI landlord's level of knowledge?

OP - letting houses is a business, and yes, you will have to do self-assessment, and comply with the law regarding registration, safety etc.

As I said, I just started letting out this property. I am not a professional landlord, and have never let property before, so I've never had to deal with tax issues. I assumed that that was the nature of this forum, to ask money related questions and get respectful answers without some know it all being patronising

CEON44 · 7 July 2015 at 8:44PM

thetope wrote: »

Gosh we're a nice bunch! Yes, you will need to register for self assessment. https://www.gov.uk/register-for-self-assessment/overview - you can register anytime and I'd recommend doing it a while before you need to, as some of the passwords and user details will come through the post. You'll need to keep all the login details and password somewhere safe as you will need to use them all again every year.

The online system is reasonably easy to negotiate, it's like a questionnaire which you methodically progress through and based on your responses it will skip parts of the form that may not be relevant. You can also save it and come back to it if you find it a bit intimidating in one go. You will have to disclose your pension income. There is a supplementary worksheet on which you can work out all the various items you can deduct from your annual income as expenses (e.g. rates, insurance, ground rent, etc.) The good news is that by the sounds of it, you will hopefully only have to pay a small amount of tax, if any, as the personal allowance is £10,600 and you'll only be taxed 20% on your income over and above that amount. As from what you've said your gross income appears to be around £13,500 (which will reduce once you factor in your rental expenses) you may find the tax is only a few hundred pounds.

Make sure you've registered with the landlord registration scheme and if you've got any gas appliances, get a gas safe engineer to certify them.

Thanks for all the good information. Shouldnt be too difficult when the time comes next year

irishjohn · 8 July 2015 at 7:18AM

Ceon - unfortunately in a forum such as this you find those whose first instinct is to pass judgement, on the assumption that they fall into the know all category.

Be assured though that those of us who enjoy helping far outweigh them. Keep posting and asking and do your best to ignore those who get their thrills from their attitude. Interesting comment from one who wants to be a nicer friend!!

Tansy_1980 · 8 July 2015 at 9:09AM

Hi - you need to fill in a tax return. HMRC have useful webinars explaining the allowances available to landlords. http://www.hmrc.gov.uk/courses/sy!!!/letting/index.htm

It's also really, really important that you make sure you've adhered to all the legal obligations that apply to landlords in Northern Ireland. The fact that you're new to the game won't be seen as an escape if the council come knocking - particularly when councils can keep the money generated by fixed penalties for their own purposes. So, you need to make sure that you

have registered with the landlord register
have protected your tenant's deposit (if paid) and provided them with certain prescribed information
have a Certificate of Fitness for the rental property
permission from your mortgage lender to rent the property out (if it's mortgaged)
have given your tenant a rent book and a tenancy statement
have gas safety certificates for any gas appliances
have proper landlord's insurance
understand your rights of access (which are limited and you can be refused access by the tenant, in which case you need to get an injunction to enter the property)
know how to properly end a tenancy, including the fact that you need to go to court to get a possession order if your tenant doesn't leave the property.

Letting property is a business, even if it's just one home and you're subject to the same legislation as a landlord with 200 properties. There's lots of advice for NI landlords on this site http://www.housingadviceni.org/advice-landlords

If you're looking at other websites, remember that the laws on renting are very different in NI to those in other parts of the UK so standard web tenancy agreements may not be valid here.

saverbuyer · 8 July 2015 at 9:49AM

CEON44 wrote: »

As I said, I just started letting out this property. I am not a professional landlord, and have never let property before, so I've never had to deal with tax issues. I assumed that that was the nature of this forum, to ask money related questions and get respectful answers without some know it all being patronising

I'm sorry but there's no such thing as an amateur landlord. Whilst perhaps Tara could have worded it better, I get the sentiment, you are now responsible for someone else's home, your have responsibilities. Tax is one of the basics. If you're uncomfortable, or want to fill in knowledge gaps I'd pay for some advice. Failure to meet your statutory duties could end in a large fine or worse. Get it right now.

HMRC consider all letting to be of a professional nature. Personal opinion is no defence.

Good luck. There's some good basic guides pinned to the main board. Not NI specific but much of it applies. Tax is the easy part.

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