Child tax credits- bit confused!

dexter888

Hi

I am currently 7 months pregnant with my first child and have been looking at how much child tax credits we will get.

I am currently self employed and earn £5000 a year, but will be a housewife once my maternity allowance stops, my partner earns £17,000 from an employed job, but we also have a property that we rent out. We do not make an large amount of profit from this property, the mortgage is £330 and the rental income is £475.

After looking on the internet it says we have to put income from properties down as extra income, not income in self employment, which I am a bit confused, do we have to put down 12 months payments of £475 (£5700 minus the £300 allowance thing) or would we put down the 12 months profit, just seems a bit unfair if we have to put the whole £5700 as we dont see most of that.

Just wondered what we'd put so I can roughly work out what we will get

Thanks

ajbisgr8

If you rent out a property you should be declaring that income for tax. You should put down your income from property profit per your tax return. This would be the total property income less expenses (your whole mortgage would not be an allowable expense - only the interest part of it).

This is entirely separate income from your self employment.

dexter888

Hi thanks for the reply

yes we pay tax on our rented property, it is an intrest only mortgage so the whole £330 is the allowable expense.

Its just that on the tax credit forms it makes out like you have to put the whole £5700 not just the profit of £1740. So are you saying we only need to put the £1740 down?

Thanks again

ajbisgr8

Yep, just the profit.

dexter888

Brilliant Thanks

dexter888

Just had another look at the form and it says;


What is the total amount of any [URL="javascript:DoGlossary('otherincome')"]other income[/URL] including pensions over £300 you and your partner have received [URL="javascript:DoGlossary('beforedeductions')"]before deductions[/URL] from 6th April 2008 to 5th April 2009? (Do not include earnings, [URL="javascript:DoGlossary('maintenance')"]maintenance[/URL] or [URL="javascript:DoGlossary('childrensincome')"]children's income[/URL].) Click [URL="javascript:WebForm_DoPostBackWithOptions(new%20WebForm_PostBackOptions("DIQApplicantQuestions$lnkCalculateOtherIncome",%20"",%20true,%20"",%20"",%20false,%20true))"]calculate other income[/URL] to go to a worksheet to help you work this out.


so it does say before deductions??

ets99

dexter888, this is precisely my dilemma too. On my tax returns, i have a minus figure. i.e all property rentals added together minus the interest only mortgages and other outgoing cost in relation to the properties. Do i need to declare this minus figure for the purposes for child tax credit which i've been getting for past year? i've just taken up a part time job and today applied for working tax credit. The tax credit helpline asked me if I had been receiving any other taxable income to which I said no since i was told minus figure is not taxable income. Just want to be doubly sure as the last thing I would want to do is later overpay! Your help and advice would really be appreciated. Ella.

allen35

This may help:

There is an example of how to calculate losses on P3 of the following:

http://www.hmrc.gov.uk/forms/tc825.pdf

Need to be good with tax calculations though