How do I follow up on rental income tax

Complete_Novice

Hello,

First time on the site, unsure of how these Taxing stuff works. Have loads of questions and would be great help if anyone can help me find answers please. I have got two different scenarios:


Scenario one:
I have rented my flat from 26th Jan 2013 and I am currently away from the country backpacking since 1st Feb 2013. Flat is let via the agency and learnt about the Rental income tax then. My questions are:
What sort of details do I need in order to follow this up in my return? I will be back in December and will be taking the flat back when the contract runs out end of Jan 2014. My last day at work was on the 18th Jan 2013. Do I need to have my tax code in order to complete this tax malaki? What about the deductions on the net rental income? Can I deduct the below?
Agents fees?
Monthly management fees?
What about my mortgage?
Had to do some repairs 3 months ago. Can I deduct this?
Flat is let furnished..can I get any deduction on this?
What else do I need to do? and most importantly which form do I need to fill in? I read somewhere about filling in overseas tax return form?? But I am only travelling and not living abroad!!!

Scenario Two: I had rented the same flat back in 2009 - 2011 for more or less 2yrs. I never did follow up this rental income tax stuff because I never did know about it. Was rented directly. Sorry for my ignorance:-( During this time, I lived in France for about 9months during which time I wasn't working in the UK. I returned to UK in June 2010 and resumed my work but didn't take the flat back until around July 2011. So, do I still have to do this tax return on this rental (between 2009-2011) income now? If so, What form do I use for this and can I deduct the same stuff as my Scenario one questions? I also had to repair the bathroom due to leak, had to replace the bathtub, fixing the drain etc that cost me GBP3500 but I do not have any receipt whatsoever. Can I deduct this from the total income? The tenant paid less rent for the last two month and was no where to be found for the rest of the money owed which was GBP1400.

Apologies for such a long message....would greatly appreciate if anyone can guide me in the right direction.

Many thanks for your help.

holly_hobby

If you are simply temporarily travelling, you are deemed ordinarilly UK resident and domicilied for tax purposes.

Your rental income is derived in the UK - accordingly it is subject to UK tax regs.

You have to submit your rental receipts via self assessment on an annual basis, regardless as to whether your total income (including net rental recipts) falls within your personal allowance or not (ie surplus taxable), or whether you actually make any profit or not, is irrlevant for HMRC reporting purposes.

You are able to claim relief for all costs associated with running the business ie in this case your let propery, for example (list not exhaustive) ...

- associated management, professional and letting fees

- essential repairs whilst the property is available for/or let (with proof of costs via a receipt or bill)

- utility servicing (ie annual safety checks etc)

- travel costs directly (ie not incidentally) incurred in visiting the unit for management etc

- mortgage INTEREST only

- furnished lettings attract 10% wear and tear annual allownce, and the cost of REPLACING said furniture (but not the initial cost/outlay of furnishing the unit ready for let) - this is just a brief guide to W&T provision etc.

Please speak to HMRC regarding how they wish to manage the prev late return (there may well be a fine for late submission).

If you feel unalbe to complete the return etc, engage an accountant/tax practitioner whom will assist.

Hope this helps

Holly

Have a read through the following which I've dug out and attached for a basic understanding .....

Self assessment guide - http://www.hmrc.gov.uk/sa/understand-online.htm
Late self assessment submission - http://www.hmrc.gov.uk/sa/deadlines-penalties.htm
Furnished lettings - http://www.hmrc.gov.uk/manuals/pimmanual/pim3200.htm

G_M

As for the historic tenancy - best advice is to come clean and declare it.

There may be some penalty for late declaration, but better that than HMRC come after you for tax evasion.

There are a multitude of ways HMRC can come to know of the old tenancy, and they are targeting landlords specifically.....

agrinnall

In addition to the tax suggestions given, as a landlord out of the country you are also required to provide your tenants with the name and address of someone in the UK who is able to act on your behalf - you may have done this already, but if not then it could be the case that the tenancy agreement is invalid and your tenants could stop paying rent (it's not something I know much about so if it does apply to you perhaps someone else will give a more definitive answer).

holly_hobby

I would imagine the management/Letting Agt (LA) fees the OP is paying cover this, BUT if not, yes absolutely, absent landlord provision/deposit protection should already be in place - but I am guessing this is what the LA has been engaged to facilitate.

Good shout to mention this though, if nothing but for top and tailing the query.

Holly x

G_M

agrinnall wrote: »

In addition to the tax suggestions given, as a landlord out of the country you are also required to provide your tenants with the name and address of someone in the UK who is able to act on your behalf - you may have done this already, but if not then it could be the case that the tenancy agreement is invalid and your tenants could stop paying rent (it's not something I know much about so if it does apply to you perhaps someone else will give a more definitive answer).

OP said

Flat is let via the agency

so assuming
* the tenant has the agency address
* the agent is in Eng/Wales and
* the agent collects the rent

there is no issue.

Complete_Novice

Thank you guys. This is a massive help. Holly hobby thanks a million for the links I shall I have a look and follow up accordingly once I am back in the UK.

Cheers:-)