Tax Return - Property & Dividend Income

jjbargaingal

Hi all

Please help if you can I am doing my first Tax Return and have some queries:

Dividend Income - I have some shares from a previous job. I received a special interim dividend of £2 per share and I am assuming I have to pay 22.5% extra tax on this dividend which basically reduced my number of shares ? Is this correct ? Also I havent declared dividend income in the past few years, is this only necessary when you are a higher rate tax payer ?

Flat rental income -
1. 10% wear and tear allowance - do i have to deduct insurance, ground rent and freeholder annual maintenance before calculating the 10% ?
2. Can I also deduct costs like roof repairs as well as the 10% ?
3. Can i deduct broadband costs - a percentage - as well as office costs minor business use £3 per week ?
4. I remortgaged to a b2let mortgage when I moved out and rented flat. Can I deduct any legal costs, valuation or searches ? I am assumming not as they are probably classed as capital ?

Any help gratefully received :rotfl:
Many thanks

jjbargaingal

I was disappointed to see no one had replied to me. Can no-one give me some advice ?? Any help gratefully received.

nakmeister

Probably everyone is off doing their own tax returns!

Dividend income - you will only have to pay extra if you are a higher rate taxpayer. If you are, you'll pay 22.5% extra of the gross dividend (i.e. what you receive plus the tax credit)

10% wear and tear - this is 10% of the net rents, and you have to deduct from rent received anything normally borne by the tenant such as council tax, water rates etc. Building insurance is usually the landlord's costs so you wouldn't have to deduct, though you would have to deduct if you paid contents insurance. Ground rent and annual maintenance, not totally sure but would think these are rightly costs of the landlord so wouldn't have to be deducted in calculating wear and tear allowance.

Wear and tear allowance is for furnishings, furniture, appliances, carpets etc. Roof repairs are separate and so you would be able to claim, assuming they are genuine repairs.

I've a feeling it's £2 use of home a week for 2007-08. Think it only went up to £3 a week from 6 April 2008, i.e. 2008-09 tax year. Are you an employee or self-employed because that makes a difference. If you are self-employed you can claim a lot more things, you just may have to show your calculations to HMRC if they ask for it.

Re legal fees on re-mortgaging, I'm pretty sure they are actually ok. All those fees would not be allowable if you were buying the property as they would be capital. Fees for obtaining loan finance, mortgage etc are generally allowable.

Hope this helps!

jjbargaingal

Many thanks Nakmeister - yes you are probably right !!
Dividend income - yes I am higher rate and got given some shares from a previous job, so I dont think I can avoid that.
10% wear and tear - I have to pay a half share of the buildings insurance to the freeholder, plus the annual maintenance and ground rent. If I can exclude some of these deductions that would help.

Ok well best change to £2 per week if that is the case. I am employed and PAYE so I cant claim the extra things I guess. Do you know about a share of broadband ? Are there any other expenses I can claim ?

Not sure on the re-mortgageing fees maybe I will try the helpline.

Thanks again. Its finding the answers which is hard !!