Renting out your home while in SFA

mrsdarbs

Hi everyone

My hubby and I are currently in NI and renting out my flat back in England. I was told that I would need to declare the income to HMRC at the end of the tax year by way of self assesment and then pay tax on the net profit.

However a colleague at work has just mentioned that as I don't own the property I am in - as it's SFA we are renting - then this may not be the case and I may not have to complete a self assesment form.

Can someone advise me on this?

Thanks

Alias_Omega

I would recommend getting an accountant, which should cost you no more then £100.

Also, the cost of the accountant can be deducted from the profit from the house. They will be able to lose cash in all sorts of places so you dont have to pay anything.

mrsdarbs

Thank you for your reply.

However, I don't need an accountant, I'm fully able to do my return if I need to it's the finding out whether i need to or not. I shall just call HMRC and find out.

I don't make a profit anyway - it's run at a loss.

lizzielondon

I believe you can offset the interest on your mortgage against it, but still have to declare it

the peeps over on the renting board will be able to give you an exact answer

TREVORCOLMAN

mrsdarbs wrote: »

Hi everyone

My hubby and I are currently in NI and renting out my flat back in England. I was told that I would need to declare the income to HMRC at the end of the tax year by way of self assesment and then pay tax on the net profit.

However a colleague at work has just mentioned that as I don't own the property I am in - as it's SFA we are renting - then this may not be the case and I may not have to complete a self assesment form.

Can someone advise me on this?

Thanks

You have to declare the money you are receiving as its income.

There are things you can claim for. I suggest you pop into WH Smiths or such like to get yourself a book about renting out property. The fact that you are in SFA has no bearing at all.

Chimaera

It sounds as if you are already assessed for tax on a self assessment basis? If not you will have to change to theis method. All rental income must be declared and you are able to offset this 'profit' which is taxable against things like mortgage interest (but only if the mortgage you have is on an interest only basis), repairs to the property, advertising costs, reasonable phone calls, travelling expenses to visit etc etc.

I think Alias_Omega recommended an accountant because legislation in this area continually changes, plus also an expert may be able to advise on things of which you are unaware and may mitigate any tax you might have to pay. You are even able to offset their costs against income received.

The reason I know all this is that I am in the same situation as you. Hope this helps and good luck.

EmmEve

Yep you need to declare it as its classed as an extra income.

mrsdarbs

Chimaera wrote: »

It sounds as if you are already assessed for tax on a self assessment basis? If not you will have to change to theis method. All rental income must be declared and you are able to offset this 'profit' which is taxable against things like mortgage interest (but only if the mortgage you have is on an interest only basis), repairs to the property, advertising costs, reasonable phone calls, travelling expenses to visit etc etc.

I think Alias_Omega recommended an accountant because legislation in this area continually changes, plus also an expert may be able to advise on things of which you are unaware and may mitigate any tax you might have to pay. You are even able to offset their costs against income received.

The reason I know all this is that I am in the same situation as you. Hope this helps and good luck.

I'm not currently being taxed by self assessment. I work full time and am taxed through PAYE. I contacted the local tax office when I started letting the flat out in June 09, so I know I will need to do a return for this tax year.

Thanks everyone for your help.

Money_mad_4

It depends on who the flat is owned by. Remember as well you have tax free earnings at around 6.5k and so if you dont work then this can account for the rent as tax free earings. You can also offset some of the facilities and management charges against tax liabilities. An most of all if its mortgaged you have relief on the mortgage paymenst as well. Why not just have a little cash in hand thing going and simply keep stum lol

unmissable

It does not make a difference whether you have filled in a self assessment form in the past or not. If you have an income (wages or rental income) then it is subject to income tax. The first 6.5K (approx) is a tax free allowance; then you are taxed at 20% on ALL income.

If you have an income from a rental property you have to declare it (via self assesment). You have loads of allowances you can deduct from your rental income (mortgage interest, legal fees...etc ec ...look them up) if you still make a profit then it (the profit) is additional income and is taxed at whatever rate you are being taxed at (usually 20% but can be 40% if TOTAL income is over the next threshold.

An accountant can do this for you for a fee (which can be added to the allowances) but it is not that hard if it is a simple case of main home being rented out whilst you are in SFA.

mrsdarbs

Thanks everyone. I just need to get a breakdown from my mortgage company as I am on a repayment mortgage so need to find out what the interest amount is.