First tax return

bornandbred

I have to do my first tax return this year as I have moved from an flat into a house and now rent out the flat (during tax year 11/12). My wife and I are basic rate tax payers.

The mortgage for the flat is in my name and my mothers (this was the only way I could get the mortgage back in 2006). Rental from the flat goes into my account and then a proportion is taken out by the bank as mortgage payment.

Do I fill out the tax return ignoring the connection of my mother to the income from the flat? She is retired so I was wondering if I am missing a trick here and for next year should I have all the financial dealings done through her so there would be less tax to pay potentially? I have no idea what pension she gets.
Many thanks

Kynthia

As you and your mother are on the deeds then you are both in receipt of rental income. However as you are not married to each other you do not need to assume a 50:50 split. You can put in writing what you want the split to be and then each do a self assessment form with that share of the income and expenses related to the property.

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

I've no idea whether there would be less tax paid if she had a higher or lower percentage. However as she is your partner in name only for the property, as you lived there and now you are letting it and keeping the profits, maybe it would be best to leave her out of it and assume a 100:0 split. There isn't much time for you to find out whether her receiving 'rental income' would affect her adversely in any way, but someone else may know more than me.

Are you going to make the deadline of 31st Jan? Would your mother make this deadline too if she has to file a return?

bornandbred

Thank you for the link. I do it all so it looks like there will be no benefit involving her. Thank you!