Landlords and Tax

theartfullodger

LplateSaver wrote: »

....I was planning to get lodgers next year but read I have to pay tax on earnings over 4k.

You have to declare if total received (before expenses) is over £4,250: For all lodgers. Even if you make a loss:
https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

LplateSaver

theartfullodger wrote: »

You have to declare if total received (before expenses) is over £4,250: For all lodgers. Even if you make a loss:
https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

Sorry for dumb question. Does declare mean automatically have to pay or does declare mean they'll work out whether I have to pay tax?

kinger101

LplateSaver wrote: »

Sorry for dumb question. Does declare mean automatically have to pay or does declare mean they'll work out whether I have to pay tax?

Assuming you take in a lodger, you do not have to declare rental receipts up to £4,250 in the tax year. You do have to declare income above this, but YOU have to work out how much tax you need to send to HMRC. That's why it's called "self-assessment".

If you've never completed a tax return before, you don't really want to be having say £4,500 of rental income. Filing in the return would be a lot of trouble for the sake of tax on £250. You might need an accountant or tax advisor to do so, which would probably make it not worthwhile.

Of course, if your total income is below the personal allowance, things might be different, but I don't know what you mean by "low income landlord". Far too vague.

LplateSaver

kinger101 wrote: »

Of course, if your total income is below the personal allowance, things might be different, but I don't know what you mean by "low income landlord". Far too vague.

I thought the OPs post was insinuating that because she is a non-tax payer she does not pay tax on her rental earnings. I wondered if that was the same for lodger earnings. I dont pay tax. I earned about 7k last year, probably about 5k this year. Don't know about next year will either be the same as this year or lower.

kinger101

LplateSaver wrote: »

I thought the OPs post was insinuating that because she is a non-tax payer she does not pay tax on her rental earnings. I wondered if that was the same for lodger earnings. I dont pay tax. I earned about 7k last year, probably about 5k this year. Don't know about next year will either be the same as this year or lower.

Whether someone is a taxpayer or not depends on how much their income is. If think you've misunderstood OP's post somewhat. There is no exemption for rental income for properties that are not you main residence. It just so happens that OP's income is below £10K, and the first 10K of any income is tax free (though OP should be aware that most benefits are taxable income if they forgot to include these).

For your case, the first £4,250 of income from lodging is eligible for "rent a room relief". Anything else is taxable, but it sounds like you'll still be below the £10K personal allowance limit.