Easy Tax question, can't find answer!

leboof

I'm trying to find an answer to what I thought was a simple question!

If I buy-to-let, what is the rental income allowance for single and joint ownership per annum.

i.e. How much can 1 person earn from rental before tax is paid?
or how much could we earn as a joint purchaser?

Thank you so much for any replies.

m_13

I think you are confusing buy to let and the rent a room scheme.

All income from renting is taxable but there are allowances you can put against tax such as the cost of an agent.

If you own the property as joint tenants then you will each have 50% of the income. If you own the property as tenants in common then you can have unequal shares. This is often used to put the higher percentage of the property in the name of the person with the lowest income so less tax is paid.

Take a look at www.landlordzone.co.uk and their useful forums for further advice on becoming a landlord.

poppysarah

Are you in effect having a "partnership" type business with someone as a BTL?

You each have your own tax allowances - but you should seek proper financial advice from an accountant about tax issues. Or ask at the HMR&C as they are always very helpful and even do free training on some things. (thats the tax man to me and you)


EDIT: you might also want to formalise the partnership to decide how it can be split up if one party decides they want to leave it.

Comyface

I'm sure you add the rental income to all of your other income, then pay tax on the amount over your personal threshold. It's just treated like any other income, but you can offset some tax with costs of maintenance of the property/ interest on the BTL mortgage, that kind of thing.

Not an expert by any stretch though, so i may be corrected now. :0

English_Bob

Income is income in my understanding. Once you have written of an expenses aginst the rent (ie mortgage interest, maintenance costs and fees), the rest is your income. Income is added to any other income you have and taxed in the usual way.
If i'm wrong on this, please let me know as i'm about to rent out a house and as i'm already in the 40% tax bracket, i thought any 'income' earned from the buy-to-let would just be added on top and would be therefore taxed at 40%.
Might be wrong. Not my area of expertise.
Bob

leboof

poppysarah wrote: »

Are you in effect having a "partnership" type business with someone as a BTL?
.

This is a simple husband & wife partnership. Thank you for the reply.

So, it appears as we are both working, that we simply tot up the rent, deduct the allowable expenses and that's what amount we pay tax on, split by two of course?

poppysarah

GIve the tax office a ring to confirm.

clutton_2

the tax office in my area run free "new self employed" courses = which are usually one day long, free, and very useful indeed.

there are a great deal of expenses you can offset against rental profits - there is an IR booklet called Taxation of Rents i think (IR50)?) - well worth a read - as its quite a complex area - some expenses need to be "held" and claimed till you sell if they are seen as capital improvements

m_13

leboof wrote: »

This is a simple husband & wife partnership. Thank you for the reply.

So, it appears as we are both working, that we simply tot up the rent, deduct the allowable expenses and that's what amount we pay tax on, split by two of course?

You fill in the property supplement on the SA form. As long as your income from property is less than £15k in total then you only have to provide simple figures although you must keep detailed records. It's easier to do online as it will calculate the tax to be paid.

There is plenty of advice on the net about allowable expenses. However, you'll need to make decisions about things including furnishings. You'll also need various safety certificates.