tax on earnings

littlemisscurious

I have recently registered on easyCar club as a 'car owner' and have rented out my car a couple of times in the past month.

My earnings so far have been less than £100 pounds, however I am expecting to rent it out for a few more months.

My question is: Do I need to pay tax on my earnings? If so, how do I proceed? Who do I contact?

This is what's stated on their website FAQ:
The rental income is taxable. Your specific liability will depend on your own broader tax situation and we recommend taking professional tax advice to assess the tax due.

Your advice is much appreciated.

Ebe_Scrooge

You will need to register with HMRC to complete a self-assessment. Any earnings from your car rental will be on top of any other income you have.

The tax-man does not care how many sources of income you have, as such, it's just your total income for the year that counts. It may well be that you're under the tax threshold, and don't need to pay anything, but better to declare everything and let the tax-man decide, that way there's no come-back !

Do bear in mind though, that you can legitimately discount "business expenses". For instance, if you use your car for business travel, you can claim 45p per mile for the first 10,000 miles, which is meant to cover the cost of running the car ( fuel, tax, mot, insurance, repairs, etc. ). I must admit I don't know the situation regarding renting your car out, but I would have thought you can claim some expenses.

It may be worth speaking to a proper accountant. An hour or two's consultation will not cost much, and he will know exactly what the rules are, and can advise you properly. He will also know how to ( legally ! ) minimise your tax liability.

Prothet_of_Doom

I'm guessing now, but what you need to do, is

1) Write down the value of the car at the start of the tax year, 6th April 2014,
2) Keep a note of all repairs, maintenance etc
3) Keep a note of the private miles you do
4) Value it again on 5th April 2015

Work out what each mile cost. Multiply this by the miles travelled by the people that paid for use, and then, You've got a fair estimate of Sales minus cost = profit, which you can use for your submission BY 31 Jan 2016. I guess you might want to discuss this approach with the HMRC, but seriously I've found them very helpful.

Although if a vehicle is more than 6 years old they assume the value is zero IIRC ? ??????

googler

Which bit of what they said was unclear?

Without knowing what tax you're paying already (your broader tax situation) we can't tell.

Are you already paying tax, either on an employed or self-employed basis? If so, then the earnings from what you're doing here are taxable.

If not, then you need to determine if these earnings take your total earnings for the tax year over the personal tax-free allowance, which was increased in the budget. If so, you owe tax on the amount over that figure.

If your total earnings in the tax year are still below the personal allowance, you owe no tax.