Didn't declare tax on rental income

Ring them or write to them. Despite the stereotypes, they are extremely friendly.

If you only have one BTL and your accounts are simple, you should be able to deal with them yourself.



GG

mystic_trev wrote:

I wonder how many other BTL's don't pay Tax on their Income - quite a few I should imagine. Even if the BTL isn't making a profit, they should still be filling in a Tax return. How many (the new breed of Landlord in particular) have thought about this?

... Indeed Trev, I fully agree. There is a view that income under £2500 needn't be self-assessed if the landlord is on PAYE, but my attitude towards it was to register straight away. If they see you as being as honest as you can then that will smooth the ride out later. The worst thing to do would be to think that you're being clever now, only to have them trawling through everything you do at a later date. Be upfront with them and they are surprisingly helpful.

dont panic

This happens all the time i am both ex Revenue and an tax accountant and i have lost count of the times i have had to do 6 years returns for someone that has recently had a call from the Revenue as someone has dobbed them in.

The Revenue are pretty good as normally it is fairly small amounts with new Buy to letters and as the IR computer system is rubbish you may not even get fines for earlier years.

I would reccomend getting an accountant for a basic set of accounts and tax return you shouldnt need to pay more than £200 and i promise they are bound to be able to reduce your bill by more than that if you do it. The advantage of using an accountant is that the know how much expenses they can estimate without drawing your return to the revnues attention for an enquiry especially important as you have not kept your reciepts.

Two allowances you may not of thought of is use of home as office and wear and tear allowance. On an average rental income of £6000 per year claiming these would save enough tax to ofset your accountants fees.

Personally unless your rental income is massive 20-30k a year (and depndant on other income) i would not even entertain setting up a company as admin charges would cost more than setting it up.

hope this helps

im not argueing with either unfortunately recently i have had a number of clients come to me where a certain accountancy firm which has recommended that all there clients become companies and they have ended up paying more tax. If you have set up the company for £100 without your name it would have only cost the firm a small amount and they have made a big prodit in percentage terms.

The intial setting up amount is relatively cheap it is the administration, accounts, tax returns, and tax that could work out more and gone are the days of the 0 percent band.

as i have said it does depend on your other income and profit and also the CGT implications. I know the firm i used to work for would not consider it if profits were under 30K and complicated comparrisons needed to be done.

For anyone thinking about it Setting up a company should not be done without the advice from an accountant.

10% for wear and tear (furnished lettings only I think).
Mileage at 40p per mile
Stationery
Mortgage interest (subject to certain rules)

Must be loads more but things such as DG or other home improvements only qualify against CGT, so I believe.

My profit in 05/06 was just over £100. This year I'll make a loss.

Oddly, there is no tax-free amount. I say oddly because there is if you only rent a room in your main residence.



GG