Big, huge mess

Lexxi

I'm not sure where to start with any of this or how much of it I need to tell you about but if anyone can help I'd really appreciate it

I bought a house in 2005 and got really ill about 2 years later so I moved back to my parents and let the house out. I always intended to move back to the house but I've been in and out of work and have also moved about to find work and kept ending up back at my parents.
I had such problems with the last tenants, not paying, court, damage etc I went with a letting agent this time and they have given me a leaflet on tax, I didn't know I had to pay tax! I've never hidden the house, I don't claim benefits when I'm out of work as the house means I'm not entitled.

I don't know what to do next, do I get everything together and contact the tax or do I just get in touch with the tax and see what they want to know. I have kept everything as the house needed wall ties, repairs to gutters, drains, roof, plastering etc not to mention the things I had to do like the gas and the court costs

I've been on the website for the last few hours and I don't know what to do. There is so much to read and now I've just found a page that says my employer wouldn't tell them if I moved and I'm supposed to get in touch when I got married, I'm scared to read anymore!

I know it looks so bad, I only let it out as I wouldn't have been able to sell it, I didn't do it to make any money and I don't think over the time I've made anything because of the problems and the work I had done.

It's been empty since about March now and I was planning on moving back in, as me and my husband had been living apart, but I didn't as I thought things would work out between us and I could go back

HAMISH_MCTAVISH

First of all, don't panic.

Chances are this is simply resolved, and that you won't owe much, if any tax at all.

We'd need to know.....

1) What has your rent income been in total over the time it's been rented.

2) What costs have you incurred over that time for the house? Some costs may be tax deductable as allowable business expenses.

3) What has your mortgage interest been?

4) What has your other income been?

In general terms, mortgage interest is allowable as a deduction for tax purposes, as are some other costs.

Also don't forget you have a tax free income allowance every year that you may not have used up fully if you've been out of work a lot, so this may not be as bad as you think.

List your income and expenses as above, and someone will be along soon enough that can advise you the allowances you can claim and what you can offset against tax.

Lexxi

Thank you so much for your reply, I've been panicing all night!
I can't get into the loft where all the paperwork is as the ladders are at the other house because of the work but once I have everything together I will be able to answer the questions.

I only have the receipts for big things, like the work, I don't know where I saw it because I have read so many sites tonight but somewhere said that I can claim travelling expenses. I just thought this was my fault for living far away so I wouldn't have details of visits never mind the train fares

Thank you again for replying, I might be able to sleep now

tbs624

OP the sooner you [edit:voluntarily] get in touch with HMRC the better. It's not just about tax due: there are penalties for late/non declaration and for late payment of tax but there may be room for negotiation.

All the information that you need on allowable expenses is available from the horse's mouth, via the HMRC web pages. Google PIM (Property Income Manual) and SA105 and related help pages. There is no need for you to waste valuable time going through it all on this forum.

If you find it all too daunting you could get a local accountant to assist in preparing the necessary papers - the costs of doing so can be set down on your tax return. Contact the local LL association and ask for their recommendations.

Lexxi

OK, so if I phone the tax up tomorrow and tell them, then get everything together?
I know that the sa105 form is for this year but if I print a few off just to show what has been paid in and out each year since it was first let it will give a clearer picture, wouldn't it?

Thanks for your reply tbs624, I do think it's daunting but I wouldn't be able to pay for an accountant, that's why I came on here to see if anyone could offer any help or advice

sequence

Start by going through your records and making a spreadsheet of how much you owe for each tax year ? Which will be rent - allowable expenses. Allowable expenses are things like mortgage interest (not the repayment part) LA fees, maintenance etc.

Kynthia

Don't ring the HMRC quite yet. I would wait a couple if weeks and spend that time organising your files and paperwork so that you are ready to tell them your income and profit figures. Go to the Direct Gov site and read up on rental/property income.

duchy

Odds are you won't owe anything (or may even be due a rebate) as you'll have loads of expenses to deduct from any profit. Costs of maintaining the house, replacing and maintaining , cost of phone calls, legal advise etc with your bad tenents, you can even claim for mileage for journeys involving house "business" and photo-copying. It all adds up. Remember it's a business so things like depreciation would be claimable too.

I agree with the advice of take a week or two to sort out your figures and research exactly what is claimable and then make an appointment at your local tax office (maybe make it now for a couple of weeks time) and take it all down there.

abankerbutnotafatcat

HMRC will give you sufficient time to submit from when you contact them so don't worry about having to get your papers together before you contact them.

I was in a similar position and I contacted them just before the deadline for on line self assessment submission in January and they gave me a deadline of May.

The first thing you have to do is apply for a reference number in order to self assess. All the info is on their website.

Remember that accountancy charges are also tax deductible but of course that only comes into play if you have made a net profit over your personal tax allowance. In your case, if you feel really out if your depth, the accountant might be worth it anyway to help you through the process although it isn't as hard as it probably appears right now.

We don't know all your details yet but, as others have said, with having only bought in 2005, spent a lot of money on the house and on travelling and as you've not always been working full time your tax bill is unlikely to be much.

HTH

getmore4less

As with anything new there is a learning curve and a lot of information to get your head round.

as has been said sart to document the situation.

I would get an a4 sheet for each year and print of a calendar for each year.

then start to make notes for thingss as you remember them.

Build up the time line it will be easier to see the bigger picture and remeber things.

rebtal dates, income, expences
each visit (train, car miles) why did you go what was done etc.

repairs

then as you find the paperwork or go back through bank/CC statements you will build up a picture of real numbers to go with each event.

At the end of the day you will probably end up doing a series of self assesment forms for each year.(thats what HMRC wanted from me when I had issues a few years back) that way they can track the tax each years and carry over expences if needed, from year to year.

It will take time there is a lot to do and remember, I would not worry about a tax bill yet chances are there will be enough expences to offset and if you have been out of work for some of the time then there may be enough personal allowance left to cover some ofthe profit(if any).

Kynthia

An accountant might save you more than their costs and may deal with the HMRC for you so it's really worth considering. Also you need to do some more reading on the difference between allowable expenses and capital expenses as one is deducted from your rental income and the other from the profits you make in the sale of the property to reduce Capital Gains Tax.

You need to create a file of all the paperwork, lease agreements, invoices, court documents, receipts, etc. You also want to write down everything you remember from each financial year such as visits, repairs, when tenants moved in and out, etc. Find all your P60s and other evidence of your income and costs such as credit card statements and bank statements. Then you can start to calculate your income, property income and allowable expenses for each financial year.