How much tax on buy-to-let property?

miked453

Hello. I am planning to rent out a property I have recently purchased and I want to get an idea what the tax is likely to be on the income. It will probably rent for around £1100 per month. Deductions would be about £100 per month (service charge). I earn around £34,000 a year so am not a higher rate tax payer. Can anyone give me a broad idea on what I can expect to pay? Difficult to find this info anywhere.
Thanks

jackomdj

Do you have a mortgage on it? What is the monthly interest? It is thus not the capital that gets geducted from your income to calculate the net profit you get taxed on. Then some other deductible costs too.

Thrugelmir

miked453 wrote: »

I earn around £34,000 a year so am not a higher rate tax payer.

Anything above £42,865 next tax year will be subject to higher rate tax.

Beneath that 20%.

You'll be able to claim other allowances and costs against the rental income. Suggest you speak to a tax accountant and get a good grounding.

G_M

Look at the government sites to see what you can offset against the rental income.

Don't forget Capital Gains Tax when you sell.

Relevant HMRC links are within this post:

New landlords: advice, information & links

theartfullodger

There's a few more taxes a landlord may have to pay....
http://www.landlordzone.co.uk/forums/showthread.php?49095-How-many-taxes-can-a-landlord-have-to-pay

booksurr

miked453 wrote: »

It will probably rent for around £1100 per month. Deductions would be about £100 per month (service charge). I earn around £34,000 a year so am not a higher rate tax payer. Can anyone give me a broad idea on what I can expect to pay? Difficult to find this info anywhere.

rental profit (1100 x 12) - (100 x12) = 12,000 pa
taxable income (tax year 14/15) : salary 34,000 + 12,000 - 10,000 (personal allowance) = 36,000
31,865 @20% = 6,337
(36 - 31,865) @ 40% = 1,654
total income tax payable 7,991
https://www.gov.uk/government/publications/rates-and-allowances-income-tax/rates-and-allowances-income-tax

actual post tax cash per month 34,000 + 12,000 -7,991 = 38,009 /12 = 3,167 per month

the above ignores National Insurance payable on your salary (not applicable to the rental profit), any pension contributiuons you make and also ignores the probablity that you seem to have no idea what your actual property costs are:
mortgage interest? gas safety certificate? insurance? repairs? tenant reference cost?

MisterB1959

buy yourself the tax caf! book on reducing property taxes, its got everything you need to know and IS tax deductible !!!