Unemployed parents rental income self assessment

dellboy102

Hi Guys

My parents have a rental property which they've rented to the council via an agent, they get £750 gross per month.

I'm doing the self assessment for them and just needed some tips, i've been doing some research and from what I gather because we provide fridges and beds etc we can have a 10% "wear and tear" allowance, will also add the home insurance.

Is there anything else I can do to lower the tax bill, my dads only other income is about £350 a month pension, I'll need to find out whether thats taxed already or not.

Also will the SA online automatically take into account they are married, i'm not sure how the personal allowance works in this case and whether its combined...

Advice would be appreciated !

jennifernil

Personal allowances are exactly that....an allowance for each person, you cannot combine them. There is a married couples allowance, but they need to be something like over 75 to get that.

If they own the rental jointly then each declares half of the profits. They may both need to make a return. There is a box to tick if the property income is shared.

If your dad's only other income is £350 per month, that should not be being taxed, check the code number applied to it Has he no state pension or benefits?

What about your mum?

dellboy102

Ah, it might be too late for me to apply for mums SA, it took quite a bit of time for the paperwork to come thru so might have to leave that for next year and just declare it as all dads income, they are quite a bit away from 75 so cant do that yet, they do both own the house though so looks like next year I should fill out 2 tax returns to avoid paying any tax.

Mum has no income, dad doesnt claim any benefits

jennifernil

I think, but not sure, that if mum did not get a letter requiring her to fill in SA, then she may be entitled to extra time to submit. I would ring HMRC and ask them.

Is this the first year they have had the income?

dellboy102

Yes the first year, dad did not get a letter either, I had to register him manually

jennifernil

Ah, I see. If the total profit is less than £5k then mum comes under the £2500 income from property rule so does not need to fill in a SA.

jennifernil

Might still be worth contacting HMRC, see if they can rush through the registration, or will give extra time. Pity to pay tax unnecessarily!

dellboy102

jennifernil wrote: »

Ah, I see. If the total profit is less than £5k then mum comes under the £2500 income from property rule so does not need to fill in a SA.

Sorry Jennifer slightly confused, does this mean mum can earn £2500 or £5k as rental income and not have to declare anything? if so can I declare less on dads SA?

Thanks again

somethingcorporate

Here is a list of the expenses we have included against our income from property we rent out:

- Management Fee
- VAT on Management Fee
- Mortgage Fee (to convert to C2L)
- Tenancy Admin Fee (from mortgage company)
- Gas Safety Certificate
- Landlord association membership
- Maintenance Charge (leasehold flat)
- Ground Rent (leasehold flat)
- Buildings Insurance
- Wear & Tear allowance (10% of rent)
- LL Insurance
- Visits to the property mileage
- Professional clean before occupation
- Mortgage interest

I hope that is useful.

jennifernil

http://www.hmrc.gov.uk/sa/need-tax-return.htm



states you need a return if you have.......



Income above a certain level from savings, investment or property

If you don't already complete a tax return, you'll need to do so if you receive any of the following:

• £10,000 or more income from savings and investments
• £2,500 or more income from untaxed savings and investments
• £10,000 or more income from property (before deducting allowable expenses)
• £2,500 or more income from property (after deducting allowable expenses)
• annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
• income from the estate of a deceased person on which tax is still due

I found this, which mentions £2500 after deducting expenses, so that would be £5000 for the 2 of them presumably.


If the rent is £750pcm, that's £9000, so you would struggle to get below £5000 profit?

Do you not have more expenses you could deduct?

jennifernil

I presume you would have to declare the income as half each, but am no expert.