Does landlord pay tax on rent?

macawslave

Hi, Im not sure if this is the right thread for this -
I have recently moved into a private rented house - first time for me and first for my landlord. I am going to be claiming housing benefit as Im long-term sick. My landlord has asked me to find out if he will have to pay tax on my rent. He is also on long-term sick, is now on half wages and not receiving any benefits. He moved in with his girlfriend so he could rent his house out to pay his mortgage. He's now 'heard' that he will have to pay 40% tax because of rental income - personally I think someone is winding him up but I said I would check it out on his behalf.
Hope that makes sense
Thanks

sooz

Good luck in your rental. I think you will need it :eek:

Your LL sounds totally inexperienced, & I'm wondering what else he has forgotten he needs to do. Do you have a gas safety certificate, and has he registered your deposit? Has he informed his mortgage company?

It is not your reponsibility to find out if he needs to pay tax or not. For the record, he should inform the tax office. Whether he has to pay tax or not depends on how much his mortgage is, if it's interest only or repayment, how much you pay, & what his expense are.

Zelie

As sooz said, it's not really your job to sort out his tax situation for him!

Any income is potentially taxable and that includes rental income. The key thing is profit - if he just covers costs like the mortgage and repairs etc and has no profit then he has nothing to be taxed. If the rent covers those things and gives him a profit then he must pay tax.

I'm going to assume he hasn't registered with HMRC as self-employed. There's some information here and another link at the bottom of that page. He really should phone their self-employed helpline and get advice. http://www.hmrc.gov.uk/workingtogether/news/times-buy-to-let-shock.htm

edgex

He will need to declare any income from the rental property on his tax return.
He needs to contact his tax office, to get the relevant forms.
If he does it all properly, he should also be able the costs of the rental from the income, & then he declares the profit made.

leespot

Exactly what the others have already said. I'm a first time LL, and even I know that it is my responsibility to sort out my tax arrangements. your LL should not be asking you to do anything other than arrange your rent payments.

paulfaz

The gas and electrical safety checks/certifcate should be your only concern here. Confirm these ASAP

N79

paulfaz wrote: »

The gas and electrical safety checks/certifcate should be your only concern here. Confirm these ASAP

But do remember that there is no legal requirement for electrical safety checks / certificate before demanding these (as opposed to asking and then making a decision on whether to take the property) - they are only required for gas.

Premier_2

Tax is due on any profit he makes at his applicable tax rate.

housesitter

Don't get involved in his problems.
To the reader, it sounds like he wasn't planning for having to pay tax.
Looking for a tennant who was able to pay cash. Unfortunately for him you are paying rent via the govt so he's looking for a way off the hook.

macawslave

Thanks everyone - He said he couldn't afford to have the gas-fire checked - would cost about £500??? so he was "advised to tell me it doesn't work" so if I chose to use it it would be on at my own peril. He said he had the oil-fired central heating boiler serviced recently then let it run out of oil - Ive lost count how many times the plumber and electrician have come out because its broken down and Im now waiting for them to fit a new boiler. I dont know anything about registering a deposit - I paid a bond of 1 months rent along with my first months rent - I have a receipt for it.... well he signed my cheque book stub because he hasn't got me a rent book yet! My concern is that hes talking about if he has to pay tax he might say we 'co-habit' here which will of course muck-up my HB claim. He seems to be a pleasant enough chap, he's been very flexible and helpful but Ive been warned not to get on the wrong side of him. The property is in a small Welsh village, where he's lived for years and well-known, I have lived in the village for about 18 months and have friends and family here. Thanks again everyone - I will suggest he makes is own enquiries with the relevant 'bods'

Voyager2002

Most councils have a housing section that gives advice on private rentals -- to both landlords and tenants. I suggest you visit them (or else contact Shelter) and find out about your own rights in relation to his somewhat dodgy practices, and ask where he should go to get the advice he so obviously needs.

You might even refer him to this board -- but if you do so you might like to edit your post so that he doesn't recognise himself!