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  • FIRST POST
    • sgr71
    • By sgr71 14th Oct 16, 5:01 AM
    • 2Posts
    • 1Thanks
    sgr71
    Tax on rental income
    • #1
    • 14th Oct 16, 5:01 AM
    Tax on rental income 14th Oct 16 at 5:01 AM
    Hi all

    My wife and I have fallen into becoming landlords because we have had to move abroad for work. Could someone please either explain or point me in the direction of instructions for how to calculate how much tax we will need to pay on our rental income?

    I have no current UK employment but I think I have earnt over the non taxable income allowance of approx. £11000 this tax year. I have paid basic rate tax on that income. I will potentially earn and pay tax through an employer in our new country.

    My wife is still earning through a UK employer and is paying basic rate tax on that.

    As advised by our letting agents we have both filled in a form which means we don't pay tax on our rental income because we are living abroad, but I understand we will each have to do our own tax return in January which will result in a tax bill. I'm trying to calculate how much we need to be saving each month to cover this so we aren't stung come January.

    Also, is there a way of calculating how much our mortgage payments will increase by following an increase in the mortgage rate?

    I am fairly confident with doing actual maths calculations but this practical stuff with percentages gets me a bit confused, e.g. I struggle to visualise what a mortgage rate of say 3% actually means. Advice would be greatly appreciated. Thank you.
Page 1
    • anselld
    • By anselld 14th Oct 16, 6:38 AM
    • 4,869 Posts
    • 4,319 Thanks
    anselld
    • #2
    • 14th Oct 16, 6:38 AM
    • #2
    • 14th Oct 16, 6:38 AM
    If you don't understand how it works it would probably be better and probably ultimately cheaper to get an accountant to do it.

    However most of the details are here ...
    https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 14th Oct 16, 7:02 AM
    • 2,690 Posts
    • 2,963 Thanks
    Bluebirdman of Alcathays
    • #3
    • 14th Oct 16, 7:02 AM
    • #3
    • 14th Oct 16, 7:02 AM
    So you've filled in form NRL1i. Have HMRC actually written back to approve that you can receive rent in full?

    You don't need to do a tax return this January (unless HMRC request it), it will be January 2018. The current tax year doesn't finish until April 17.

    How long will you be abroad? If your home increases in value you are opening yourself up (potentially) to CGT.

    ONLY the interest component of the mortgage is tax deductible. For instance, if the rent is 1000 and Mortgage is 800, and you have a repayment mortgage, you will not pay tax on 200. It will be on more like 5/600 (dependant on interest rate, those numbers are a huge approximation)

    Go and see an accountant. It will not cost much, and save you a hell of a lot of grief.
    • G_M
    • By G_M 14th Oct 16, 11:29 AM
    • 37,049 Posts
    • 40,972 Thanks
    G_M
    • #4
    • 14th Oct 16, 11:29 AM
    • #4
    • 14th Oct 16, 11:29 AM
    * Tenancies in Eng/Wales: Guides for landlords and tenants
    • sgr71
    • By sgr71 14th Oct 16, 4:52 PM
    • 2 Posts
    • 1 Thanks
    sgr71
    • #5
    • 14th Oct 16, 4:52 PM
    • #5
    • 14th Oct 16, 4:52 PM
    We will be abroad for 2-3 years. Thank you for the advice and links in particular, lots of food for thought.
    • Crashy Time
    • By Crashy Time 14th Oct 16, 8:50 PM
    • 2,907 Posts
    • 1,686 Thanks
    Crashy Time
    • #6
    • 14th Oct 16, 8:50 PM
    • #6
    • 14th Oct 16, 8:50 PM
    http://www.mortgageintroducer.com/buy-let-will-dampen-15-20-2018/#.WAE2giwzXct
    • anselld
    • By anselld 14th Oct 16, 9:19 PM
    • 4,869 Posts
    • 4,319 Thanks
    anselld
    • #7
    • 14th Oct 16, 9:19 PM
    • #7
    • 14th Oct 16, 9:19 PM
    Pointless spam.
    • Crashy Time
    • By Crashy Time 14th Oct 16, 10:19 PM
    • 2,907 Posts
    • 1,686 Thanks
    Crashy Time
    • #8
    • 14th Oct 16, 10:19 PM
    • #8
    • 14th Oct 16, 10:19 PM
    Pointless spam.
    Originally posted by anselld

    Would it be "spam" if they were saying "Rents to soar!"?
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