paying rental tax through PAYE

katejo

How easy it it usually to do the above? So far I have kept my rent within the limits of the rent a room allowance but I am considering a slight increase from the new tax year in April to cover the increase in gas/electricity costs. I would therefore have to declare the money received in excess of the rent a room allowance. It would still be a relatively small sum and i have nothing else to claim for or declare. I work for a university.
My current lodger has been with me for 2.5 years and is not currently planning to move as far as i know but I would need to adjust it if he were to go and I didn't get a new lodger straight away.
I am not sure whether the small increase which I would make would be worth the hassle involved in declaring it.

talkinpeace

just do a tax return - FAR simpler than messing about with your PAYE code.

katejo

talkinpeace wrote: »

just do a tax return - FAR simpler than messing about with your PAYE code.

But I have heard that the tax office now discourages the completion of a tax return unless you have a significant amount to declare (which I wouldn't have).

Skint_yet_Again

If you are PAYE and have no other reason to complete a self assessment tax return you only need to complete one for rental income if your gross rents before expenses are £10000 or more, or if net taxable rents after expenses are £2500 or more.

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

You will need to contact HMRC and advise them of the amounts as soon as possible so they can amend your tax code

katejo

Skint_yet_Again wrote: »

If you are PAYE and have no other reason to complete a self assessment tax return you only need to complete one for rental income if your gross rents before expenses are £10000 or more, or if net taxable rents after expenses are £2500 or more.

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

You will need to contact HMRC and advise them of the amounts as soon as possible so they can amend your tax code

That is what i thought. I am currently not charging in excess of the rent a room allowance. Do you mean that I should inform the HMRC in anticipation ie. to tell them that I will have increased income from April 2013 onwards? I will still use the rent a room but just declare the amount in excess of that so i won't have expenses to give.

heretolearn_2

I'm afraid you can't do it that way.

You either do 'rent a room', keep beneath the maximum rent limit, and not have to declare

or

Declare all rent and expenses and pay tax on your profit.

You can't mix the two (only declare what's over the rent a room limit minus expenses).

katejo

heretolearn wrote: »

I'm afraid you can't do it that way.

You either do 'rent a room', keep beneath the maximum rent limit, and not have to declare

or

Declare all rent and expenses and pay tax on your profit.

You can't mix the two (only declare what's over the rent a room limit minus expenses).

Yes you can. I have looked into this before now. The difference is that you are not allowed to deduct any expenses from the amount in excess of the rent a room allowance. You have to pay tax on all of it.

00ec25

heretolearn wrote: »

You can't mix the two (only declare what's over the rent a room limit minus expenses).

yes you can as clearly shown on the guidannce , if you operate RAR but have income >4,250 you pay tax on the excess over 4250
http://www.hmrc.gov.uk/manuals/pimmanual/pim4001.htm
"In addition, receipts over the £4,250 exemption limit can be taxed on an alternative basis that may produce a lower tax bill. Briefly, the excess of the gross receipts over the exemption limit is treated as the taxable rental income instead of the actual profit."

OP
as regards paying tax, no you do not need to do a SA return, you must write to your tax office and ask for Form P810 . You cannot donwload a blank form, HMRC must send it to you but it is simply a list of your excess income not a tax return.HMRC will then adjust your tax code to collect the tax via your PAYE
https://www.gov.uk/renting-out-a-property/paying-tax

katejo

00ec25 wrote: »

yes you can as clearly shown on the guidannce , if you operate RAR but have income >4,250 you pay tax on the excess over 4250
http://www.hmrc.gov.uk/manuals/pimmanual/pim4001.htm
"In addition, receipts over the £4,250 exemption limit can be taxed on an alternative basis that may produce a lower tax bill. Briefly, the excess of the gross receipts over the exemption limit is treated as the taxable rental income instead of the actual profit."

OP
as regards paying tax, no you do not need to do a SA return, you must write to your tax office and ask for Form P810 . You cannot donwload a blank form, HMRC must send it to you but it is simply a list of your excess income not a tax return.HMRC will then adjust your tax code to collect the tax via your PAYE
https://www.gov.uk/renting-out-a-property/paying-tax

Thanks but do I complete this form at the end of the tax year or the beginning? eg. if I increase my rent slightly from April 2013, do I request this form at the end of March 2014? i don't want to do it now as my lodger could move out half way through the year so I might not exceed the RAR limit.

jimmo

A P810 is used to report the income etc the previous tax year so that if you filled one in in April 2013 you would report your income for the tax year 2012/13.

So there is no need for you to bother until April 2014.

Some people in your situation prefer to pay up-front and if you were one of those you would need to phone HMRC before April.

Otherwise there is no need to bother.

katejo

jimmo wrote: »

A P810 is used to report the income etc the previous tax year so that if you filled one in in April 2013 you would report your income for the tax year 2012/13.

So there is no need for you to bother until April 2014.

Some people in your situation prefer to pay up-front and if you were one of those you would need to phone HMRC before April.

Otherwise there is no need to bother.

That's what I hoped to be the case. Thanks