Tax question lodger plus buy to let

theartfullodger

Landlord's income from property is not "earnt": It is UNEARNED income.

, i am hugely aware that property prices are going probably boom for another good while yet so assessing options....

Oh dear... And if they don't, if they drop, interest rates rise (**) and rents drop also - what then eh??

** I had a mortgage when Bank of England base rate was 17% (Thatcher..): It hurt, believe me, it hurt,...

Innys1

padington wrote: »

You cant undeclare on money not earnt. I'm seeking very simple rough advice to pen a few ideas together. I've never not paid my tax owed. Hence my advance questioning.

Oh dear.

So you think unearned income doesn't need to be declared? Good luck with explaining your logic on that with your friendly neighbourhood tax inspector.

In the real world, expect fines and penalties for the income you have received (is that better?) but not paid tax on.

As others have said, there's no such thing as a BTL allowance, unless you're referring to your personal allowance which can be deducted from all your income, whatever its source.

padington

Innys1 wrote: »

Oh dear.

So you think unearned income doesn't need to be declared? Good luck with explaining your logic on that with your friendly neighbourhood tax inspector.

In the real world, expect fines and penalties for the income you have received (is that better?) but not paid tax on.

As others have said, there's no such thing as a BTL allowance, unless you're referring to your personal allowance which can be deducted from all your income, whatever its source.

What are you going on about ? I'm asking hypothetical advice to asses my options. I've never not paid my tax hence my diligence with asking this question.

HappyMJ

padington wrote: »

What are you going on about ? I'm asking hypothetical advice to asses my options. I've never not paid my tax hence my diligence with asking this question.

So you don't have a lodger and you don't have a BTL property as yet.

You didn't make it clear.

You do realize that BTL property management isn't as easy as it sounds. Yes, the returns are higher than putting the money in the bank or in your pension but you need to do some work for it....or outsource that work to others at the expense of your profit. There's quite a lot of legislation you need to be aware of. You also need quite a reasonably large emergency fund. My emergency fund is £5,000 of cash plus a further credit limit of around £10,000 on credit cards should the worst happen and the property is completely destroyed. Although insurance will cover the majority of the costs to rebuild you need to pay to decorate, carpet and landscape it again and the year or so it takes to rebuild you aren't getting any rent but you still need to make your mortgage repayments.

G_M

Just to be clear, you do not yet have either a tenant or a lodger. You are currently contemplating both?

padington wrote: »

Yes, day job 32k, lodger 8k buy to let 10k. Trying to work out roughly how much the tax man is going to want ( should I go down that road ).

You get the (single) personal allowance of £10,600 if you are single on your total income of £50,000 (32+10+ 8).

As the income from your lodger is £8K, it exceeds the Rent-a-Room scheme allowance (£4250) so forget that.

Complete a self-assessment tax return form declaring all your earned and unearned income, and claiming the allowance, plus any permissable expenses (see links below).

There are lots of useful links here:

* New landlords: advice, information & links