How much tax will I pay?

ecclesto

I am thinking of renting my house out and wondered how much tax I would pay. I am a single person paying the normal tax rate with a wage of £21,000 per year. My house rent would be £795 per calendar month netting me £735 per month. As I already pay tax and my tax code is used up, how much of my rent would be used up in tax.

Skint_yet_Again

On the income you have stated you would pay 20% tax on your rental income. If you do decide to let the property you need to let HMRC know straight away and you will be put into self assessment.

dan.date66

Well it depends on what is truly the net figure. If it is what you say, £735 per month, assuming fully let for the year (unlikely), your profit would be 12 x 735 = 8820, tax thereon would be £1764 p.a. There are no issues with higher rate tax with your salary and no additional NI considerations with rental income.

However, bear in mind all the deductions you can claim against rental income, namely;

- mortgage interest (not capital repayment)
- repairs and renewals
- letting agent fees
- travel to and from property (when only purpose of the travel)
- gardening fees (if you are paying for them)
- safety certificates

This list is by no means exhaustive. you will probably find your likely income lower, and hence your tax bill.