Do I pay tax yet on a flat I have started letting out?

OxfordRob

Happy New Year to one and all.

It has been a hectic old 2009 where I moved into live with my fiancee and we started to let out my 1 bed flat in July. The rent paid by the tennent is £575 excluding bills and Council tax. The letting company take £40 and the rest goes into a bank account I created to receive that money.

The money in that account I use to pay the mortgage on the flat where there is about £60 left over a month.

I have no idea where to start with tax and am worried about the 31st Jan deadline for tax self assesment.

Do I need to fill something in and if so for how much etc?

Can I take off the cost paid to the letting company and mortgage costs? If so the profit left over is tiny?

How does it work and where should I go to get help? Do I need to submit this Jan?

Any help would be a great help thanks.

ET1976

Firstly, you don't need to have paid anything by the 31 January deadline as that is for the tax year 08/09 and you didn't start letting until tax year 09/10.

Just give the revenue a call, they will advise you on what to do next. You will probably have a choice of filling in a self-assessment form, or letting them collect the extra tax through your tax code (assuming you're on PAYE), since the amount looks to be so low.

Try this link for info:
http://www.hmrc.gov.uk/sa/index.htm

There is a 'contact us' section at the top where you can look for phone numbers, but from memory I think I just rang the one which was on my last tax code notice when I started out.

You can find details of allowable deductions on the above site, also try Landlordzone.co.uk for more info. Briefly, you can deduct mortgage interest but not capital repayment (if there is any) from taxable income, plus various mainentance and other costs which you will find listed on those websites.

HTH!

OxfordRob

Thanks for the quick reply. It is nice to know that I at least don't have to panic about this and rush something through by the 31st this year however Tax and getting it right is something that scares me. From sins of my father I know that you can do many things in life but get in trouble with a tax man and you know you are in strife

Kaz64_2

This is something that is worrying me too... but I started renting my flat in July 2008. Same situation as OxfordRob... rent covering the mortgage, plus about £50 left over. Would be great to just pay it through the PAYE. Save so much paperwork! Thank you ET1976 for your help. Will phone the tax office and see what they say. :-)

jamesb1239

From what i have read on the house buying renting and selling board on the interest on the mortgage is tax deductable, any actual repayment is classed as profit

scottn

If you collected any rental income in the tax year to April 2009, you will be required to complete a self assessment by 31 Jan 2010.

The self assessment must now be completed online and it will calculate how much tax you owe - you can then decide to pay this in a lump sum (also due by 31 Jan 2010 or face the penalty charges) or to have your tax code adjusted if the amount due is small.

You should really contact HMRC as soon as you start letting so that they can send you a self assessment - you can phone but you'll need to follow it up with a letter.

Kaz, you should get on to the case now. You can probably get an accountant to do if for you for a few hundred pounds.

orangeslimes

The best advice is to get an accountant to do it for you

chappers

Personally speaking I would say your money would be better spent joining a LL association, the taxation on a single let is pretty straight forward and a good LLs association would be able to tell you all you need to know, try having a look over at landlordzone for some more advice.