How do i put this right?

[Deleted User]

ACEJ wrote: »

(Up till then I had assumed the rent would come under the Rent a Room scheme which does not have to be disclosed on this form but later realised due to the layout of the house it would probably not and so should have been declared).

Please can you clarify on this point. You talk about renting out a property and having a tenant, were you a resident landlord? If you were a resident landlord -- you lived in the same property as the tenant -- then you are eligible for the rent a room scheme, regardless of the layout of the house.

00ec25

citricsquid wrote: »

-- you lived in the same property as the tenant -- then you are eligible for the rent a room scheme, regardless of the layout of the house.

not if it was a self contained area and the occupant did not share the basic facilities (kitchen & toilet) with the LL, which is what the poster seems to be implying by referring to layout

at the end of the day if you are concerned enough to be asking questions about declaring then presumably you are big enough to take the consequences.
if you only intend to "fess up" if the consequences are small then why are you asking

as far as paying is concerned then if the net profit is less than £2,500 HMRC may allow you to pay up via a tax code adjustment so you pay your tax via PAYE, however, if penalties and interest are involved they may well require you to settle as a lump sum, you won't know until you ask

TheQuietMan

Forgive me if this is a stupid question but would you still get penalised or fined for not filing a tax return even if there was no tax due?

00ec25

TheQuietMan wrote: »

Forgive me if this is a stupid question but would you still get penalised or fined for not filing a tax return even if there was no tax due?

you will incur the standard £100 penalty for not submitting a tax return irrespective of whether tax was due or not

this assumes that it is required that you submit a tax return - the rule for which is net profit >£2,500 or gross rent over £10,000
under those limits the requirement is you must declare the income and HMRC will decide if it wants you to do a return or whether it will accept figures on a letter.

In the retrospective situation you are in it will largely depend on the attitude of the person dealing with you as technically they can impose the penalty as stated above or they may exercise discretion

ACEJ_2

House is arranged as 2 flats from previous owners use but sold to me as 1 house on the basis that the meters were changed to single ones serving whole house. Council tax was also rebanded as single property based on this. There were no other requirements imposed by either mortgage (now paid off) or council tax. I had always planned to convert the house back to one but when my circumstances changed started letting 1 flat out, all bills and c-tax included as they coulnt be separated. I always lived in the other flat and paid all bills. Since researching this sitution I now believe that from a rental and possibly c-tax point of view this would now be considered a separate dwelling even if previously it wasn't. My current tenants benifits claim has already called the c-tax banding into question which is why I am so worried about the further implications.

[Deleted User]

00ec25 wrote: »

not if it was a self contained area and the occupant did not share the basic facilities (kitchen & toilet) with the LL, which is what the poster seems to be implying by referring to layout

As far as I understand it a lodger is a lodger whether or not they share basic facilities, the difference is in their rights (excluded occupier vs. occupier). The HMRC documentation makes no distinction, it only refers to a "lodger". Do you have a citation for occupiers not being covered under the rent a room scheme? This isn't my area of expertise so you're probably right but it would be helpful to have something concrete. Thanks!

TheQuietMan

Ok that kind of ties in with what I believed to be the case with us, hence the reason I never declared anything to HMRC.

Our annual net profit from our rental income has been around £1680 (slightly less until around 2 years ago when our mortgage interest reduced by around £20 per month).

Just to clarify, and forgive me if i appear stupid but, given that this is less than the £2500 limit you refer to, do I still have to inform HMRC of these earnings?

ACEJ_2

TheQuietMan wrote: »

Forgive me if this is a stupid question but would you still get penalised or fined for not filing a tax return even if there was no tax due?

Thank you TheQuietMan, this is exactly the question that I have not been able to find an official HMRC answer on.

00ec25, where can I find this info from HMRC?

agrinnall

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

You have income from savings, investment or property

If you are an employee or a pensioner and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. You'll need to complete a tax return instead if the income you receive is:

• £10,000 or more from taxed savings and investments
• £2,500 or more from untaxed savings and investments
• £10,000 or more from property (before deducting allowable expenses)
• £2,500 or more from property (after deducting allowable expenses)

If you don't pay tax through a PAYE code you’ll need to complete a tax return if all of the following apply:

• you have income to declare, for example income from savings, trusts or abroad, rental income from land or property
• your total income exceeds your total allowances and reliefs
• you have tax to pay on this income

http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#3

Length of delay
Penalty you will have to pay
1 day late
A penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.
3 months late
£10 for each following day - up to a 90 day maximum of £900. This is as well as the fixed penalty above.
6 months late
£300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.
12 months late £300 or 5% of the tax due, whichever is the higher.
In serious cases you may be asked to pay up to 100% of the tax due instead. In some cases the penalties can be even higher than this.
These are as well as the penalties above.

TheQuietMan

Wow they are steep penalties! Are those fines really imposed for people in my situation? If so might just tell them I started letting it out this month lol:D