Minimising tax - BTL taking me into 40% tax

molit

Hi,

I'm sure this is an often asked question, but I've been through about 10 pages of posts and not found anything.
I am looking for advice on minimising my tax - I figure now is the time to get sorted rather than 31st Match
Facts an figures
Will earn about 41k this tax year from my main job
Rental income of ~7k from previous house, let from 1st may 2009
Unfurnished, but with white goods included. I have had a couple of workmen round to tighten up screws etc ~£100.
Using a letting agent charging 11% fully managed
Mortgage interest costs is about 4k a year
also am looking to buy and sell things on the web - looking to realistically make about 2-3k, but most of this will be after april.

I am currently single, although open to offers

As far as I understand, I am going to be liable for higher rate tax on all of my income in excess of 43k, less anything I can set against it for the house?
At work they offer salary sacrifice for pensions. I was thinking putting a bit more into my pension to pull me back below the 40% threshold. this is the only solution I can come up with/way opf reducing my tax bill. Does anyone else have any other ideas? Also what can I write off against tax for a btl?
Also, are there tax implications of extending my current morttgage on the house that I let out?
Apoligies if this is the wrong forum, and thanks in advance for your help -I'm not looking for exact answers, just opinions, and places to look

dzug1

molit wrote: »

Hi,

As far as I understand, I am going to be liable for higher rate tax on all of my income,

Then you misunderstand - you will only be liable for higher rate tax on that part of your income which is above the higher rate threshold - which is roughly £41K.

CLAPTON

you can earn 43,875 before paying tax at 40% on the excess over 43,875.
any pension contribution will be tax free so comes off your income before the 43,875 is counted

you can offset the interest on any mortgage up to the value of the BTL property at the time of first letting plus any letting costs etc.

molit

cheers for the replies - meant to say in excess of 43k in original post

looks as though the best option is pension then

just to check my understanding, if I take additional equity out of the renatl house, I dont get the tax benefits on that bit, but they remain on the original sum

Can I claim for wear and tear on carpets, curtains white goods etc? or is this only deductable if they are replaced?

CLAPTON

you can claim interest on a mortgage up to the value of the rental property at the time it was first rented out

the mortgage does not need to be on the rental property
and yes you can claim the relief if you later increase the mortgage (up the the value as above)