Child Tax Credit & Rental Income

AndySarah

Hi all,
I have read through the FAQs and searched the forums, but no-one seems to have posed this question before (either because its not a normal situation, or its obvious and I shouldn't be asking!)

Basically, last year (May 06) my wife and I bought a property specifically to rent out. As I have been led to believe by HMRC, I put down my rental income in the 'other income' section of the Child Tax Credit return form.

However doing so has dropped our CTC payments down from approx £1500 p.a. to £450 p.a. which is nearly £90 a month less!! However the rental income is not profit, as the mortgage (interest/repayment 15% for the deposit, and 85% BTL interest) is more, so I actually make a loss.

Is this correct?
TIA,
Andy

flier

YOu shouldn't be putting down your rental income in the forms, you should be putting down total income less any costs involved, as you say, in renting out the property. I believe, if memory serves me correctly, that you can put on the form that it is an estimate and should confirm before 31st December the true amount of your income for the previous financial year.
You should probably be filling in a tax return, so basically anything you calculate for this should be included in youe tax credits.

hope this makes sense and helps you.

confused!_13

I have a property i rent out, HMRC advised me that i need to declare on my tax credits the rental amount ie £500 pcm minus the mortage amount ie £250, so i declare £250 a month as other income. This is added onto my earnings.

I got a tax credit over payment in 2004-2005 and was investigated due to this! I can assure you the info is correct!

Hope that helps

robindunne1

Ta xcrdits are calculated on taxable income. As mentioned above you need to deduct the interest payment ont he mortgage - not the entire mortage.

There are also other deductions you can make for wear and tear, letting agent fees etc.....

If you are making a loss on your rental income, you cna use that loss against other income which could actually increase you tax credit award. You need to fill out a tax return as it could mean a tax rebate too.