claiming tax relief against rental income

katejo

00ec25 wrote: »

With respect, you can't have done much reading then. The single most important place to start to understand CGT is to read HMRC helpsheet 282 here which is updated every tax year and explains the basics about CGT
in relation to lodgers read the bottom of page 2, I quote:

"If you have a single lodger, the rooms occupied by the lodger qualify for relief. If you have more than one lodger, or if you let part or all of your home at any time in your period of ownership, the let parts will not qualify for Private Residence Relief. However, you may be entitled to claim ‘Letting Relief’ which is explained on page 6."

I have never needed to look at that in detail as I have only ever had a single lodger.

katejo

jimmo wrote: »

You could do a lot worse than look at the Tax Return Letting Income pages,
http://www.hmrc.gov.uk/forms/sa105.pdf
Together with the guidance notes.
http://www.hmrc.gov.uk/worksheets/sa105-notes.pdf
I imagine it is not exactly easy reading if you are not used to dealing with tax matters but the basics are all there. You should also remember that whilst HMRC try to guide you towards correctly determining your own tax liability, they are not exactly in the business of advising you how to minimise your tax liability. That is what accountants are for.
Strictly speaking, completing the Tax Return is the easy bit. The big headache will be preparing accounts (or a profit and loss computation) in order to complete the Return.

I have had a look at this document. It was actually quite helpful. It seems that I can simply state my excess over the £4250 and then enter £4250 in box 35. they will then send me a bill for that tax. I have absolutely nothing else to declare as I am a standard rate tax payer on PAYE. I had originally thought that if i exceeded £4250, i would have to give a breakdown of all my expenses in detail.

00ec25

katejo wrote: »

I have had a look at this document. It was actually quite helpful. It seems that I can simply state my excess over the £4250 and then enter £4250 in box 35. they will then send me a bill for that tax.

you have misunderstood.
SA105 is the supplementary page from the normal tax return covering UK property income, it is in addition to you having to do the normal tax return. HMRC will not send you a bill, you file the return and pay the tax yourself.

you need to understand the basics of SA, start here
http://www.hmrc.gov.uk/sa/introduction.htm

as the reason for you now having to do a tax return is because you have gone over 4,250, you will need to complete the basic return (pages SA100) detailing your PAYE income and the tax already paid on that, and then, in additon, you will need to do page SA105 for the rent. The tax you owe will be based on your totoal income (paye + rent) so that the correct rate (basic, hugher etc) is then used

the tax year runs 6 april - 5 april, so assuming you frist exceeded 4,250 during 11/12 (ie. after 6 April 2011) you will need to complete a tax return for 11/12 by 31 Jan 2013 at the absolute latest

katejo

00ec25 wrote: »

you have misunderstood.
SA105 is the supplementary page from the normal tax return covering UK property income, it is in addition to you having to do the normal tax return. HMRC will not send you a bill, you file the return and pay the tax yourself.

you need to understand the basics of SA, start here
http://www.hmrc.gov.uk/sa/introduction.htm

as the reason for you now having to do a tax return is because you have gone over 4,250, you will need to complete the basic return (pages SA100) detailing your PAYE income and the tax already paid on that, and then, in additon, you will need to do page SA105 for the rent. The tax you owe will be based on your totoal income (paye + rent) so that the correct rate (basic, hugher etc) is then used

the tax year runs 6 april - 5 april, so assuming you frist exceeded 4,250 during 11/12 (ie. after 6 April 2011) you will need to complete a tax return for 11/12 by 31 Jan 2013 at the absolute latest

According to the HMRC website, i only have to complete a tax return form if the following applies:


£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

None of these applies to me at all. The same site says that if I exceed the £4250 (by only a small amount) and I am on the PAYE system, i can just contact hmrc and they would just adjust my tax code.