Rental income and Tax

jim_rogan

Hi all!
I'm looking for some advice regarding rental income tax!

I'll rent out 1 bed flat for about three months to my friend, and its income will be less than 600£ a month.
My friend is a student, so he can get council tax exemption - but he said he has to submit discount application form (for council tax) and tenancy agreement as a supplement document.
I'm currently unemployed, and will be vacated (travelling to other countries) during the rent term.

In this case, do I need to pay rental income tax? and if so, how can I declare this and how much will it be cost?

Thank you all!!!

Werdnal

You need to apply to HMRC for a self-assessment form, and complete all the income details (honestly!), at the end of the relevant tax year. I think you can also do your return online if you register with them first. They will send you a demand if you are due to pay anything.

I have let a small studio flat for 10 years now, and work part-time. So far every year I have had a demand showing NIL to pay, but you must let them decide. Speak to your local tax office for advice.

G_M

There are also special rules for non-resident (ie overseas) landlords. Especially if the rent is paid directly into your account rather than to a UK agent. Details here.

As Werdnal says, you ned to declare the income but I doubt if there would be any tax to pay given your circumstances.

jim_rogan

Thank you all!

I visited one stop shop in my town, and an officer said if it's 1 bed room flat, I don't need to pay income tax.

But I'm still confused whether I have to declare, and if so, where and how to..

taxsaver

The 'officer' is talking out of the back of his head! As has been stated by others, you most certainly need to advise HMRC of the rental income and then submit a self-assessment tax return with your profits, should you make any, declared. You may not in the end pay any tax, but you must declare the income. Also, as has again been pointed out, you need to be aware of the Non-Resident Landlord obligations.

G_M

jim_rogan wrote: »

Thank you all!

I visited one stop shop in my town, and an officer said if it's 1 bed room flat, I don't need to pay income tax.

But I'm still confused whether I have to declare, and if so, where and how to..

I'm afraid they are wrong. They may be getting confused with the arrangements for lodgers (who live with their landlords).

For tax detail relating to tenants info is from HMRC here.

grizzly1911

In view of the type of property and term is it even worth claiming Council Tax exemption?

Depends on the friend I suppose.

grizzly1911

G_M wrote: »

I'm afraid they are wrong. They may be getting confused with the arrangements for lodgers (who live with their landlords).

For tax detail relating to tenants info is from HMRC here.

But if the OP rental net profit and any other income is below his personal taxable allowance he will not pay tax. Op is currently unemployed.

Question then is what purpose does the tax return make???

Any taxable income would be at 20%.

jim_rogan

taxsaver wrote: »

The 'officer' is talking out of the back of his head! As has been stated by others, you most certainly need to advise HMRC of the rental income and then submit a self-assessment tax return with your profits, should you make any, declared. You may not in the end pay any tax, but you must declare the income. Also, as has again been pointed out, you need to be aware of the Non-Resident Landlord obligations.

Thank you very much! Do I have to declare BEFORE the term begins? And even if I'll be vacated only for three or four months, I'm categorised as non-resident landlord?? Thanks again!

G_M

grizzly1911 wrote: »

But if the OP rental net profit and any other income is below his personal taxable allowance he will not pay tax. Op is currently unemployed.

Question then is what purpose does the tax return make???

Any taxable income would be at 20%.

To comply with the legal requirement to complete a tax return?

Reporting your profits to HM Revenue & Customs


If your profit is less than £2,500

If you're employed, or getting a pension through PAYE, and your taxable income from property is less than £2,500, your Pay As You Earn (PAYE) tax code can be adjusted to collect the tax on your property income each year. Just ask HM Revenue & Customs (HMRC) to send you form P810 to report your income each year.
.........
Paperwork that you need to keep

You'll have to keep records of your property letting business for six years after the tax year they're for. You need them to back up the figures you put on your tax return. Your records should include details of:

• all the rent you receive and the dates when you let out the property
• any income from services provided to tenants
• your business expenses
• rent books, receipts, invoices and bank statements

jim_rogan

grizzly1911 wrote: »

But if the OP rental net profit and any other income is below his personal taxable allowance he will not pay tax. Op is currently unemployed.

Question then is what purpose does the tax return make???

Any taxable income would be at 20%.

Thank you for your reply! But I'm still bit confused... I think I need to call HMRC...