very basic tax question

nat38

can someone please explain how rental income is taxed?
thanks!

CLAPTON

rental income is taxed via self assessment

the amount of tax is based on the profit of the rental i.e rent less allowable expenses

nat38

thanks again clapton

and is there any allowance? like the 10,600 you described for capital gain?

CLAPTON

the profit from rental income is related to income tax, basically it is added to your other earnings and taxed as income accordingly

maybe give some details of your situation and we could help a little more

Savvy_Sue

There is the Rent a Room scheme if that's relevant to you.

Meeper

To try to be somewhat more helpful than the vague responses already given - rental income is taxed at your marginal rate after deduction of allowable expenses. Allowable expenses include things like mortgage interest (not necessarily mortgage on the property being rented out), property repair, rental agent fees, property improvements to make it rentable, and so on. If there is still a profit after deduction of all of these expenses (and a few more less common ones) then it is taxable at whatever your marginal rate is (20% for basic rate taxpayers, 40% for higher rate and 50% for additional rate). The rental income and related expenses should be declared to HMRC via the annual self-assessment tax return (there is a rental property supplemental sheet) and HMRC will tell you exactly how much tax is due if you haven't been able to work it out for yourself already.

Newly_retired

If you have done all those calculations yourself and there IS no profit, do you still need to declare it, if the rest of your tax is PAYE?