HELP - New to Self Assessment/taxing/HMRC

konn1ch1ha

Hi everyone,

This will be my first self assessment tax-paying year (2014-2015) in January and am looking for some advice and pointers.

Let me go from the start. At the start of the educational year of 2014 (September), I started working in a school as a TA on PAYE basis, so tax is already paid for. But, I was also receiving income from a property I own (no mortgage) that I had just bought a few months earlier. I have estate agents fully manage the property and they take their cut (10% + tax). Now say for the first month's rent I only receive £200 after costs, eg - inventory charge, a new fridge freezer etc. Do I pay tax only on the £200 I receive and not the net/gross(?!). I received £550pm after the first month and this continue for the remainder of the 6 month tenancy. The second tenant paid slightly less at £480pm and now I have a tenant that paid the full 6 month's rent as he is an overseas student at full price.

How do I present and lay this all out with my job on the self assessment? What's the difference between online and paper hand in? I now work in a school part time on PAYE but not enough to pay tax (it's £384 + £520 for a child I work with 1-2-1). And I'm also going to be earning a bit of money, but not regularly, from gigs. I also have student loans.

I should say that I have made an account with HMRC and have a unique tax ref no. but it's all so confusing for my first time doing this. There's also complications with the Government Gateway thing that ties in with it.

Any light shed on the situation would be greatly appreciated.

Thanks.

Pennywise

konn1ch1ha wrote: »

Do I pay tax only on the £200 I receive and not the net/gross(?!). I received £550pm after the first month and this continue for the remainder of the 6 month tenancy.

It depends on what the expenses are. Some will be deductible for tax, others may not.

You'll have to read the help sheets for the SA return itself to learn how to enter your employment income/tax and also the sheet for property letting to learn how and where to enter the rental income and associated costs you with to claim form. The SA return is a series of boxes you need to fill. Gross rental income will be in one box and the allowable expenses will be in other boxes according to their nature.

Why are you happy to pay for an agent to manage the property, but seemingly not willing to pay for an accountant to do your tax return? Some things are best left to the professionals. From your post, it doesn't sound like you have any idea about tax and tax returns, so you're going to have to spend a lot of time researching it and risking making mistakes if you want to do it yourself.

Cook_County

You prepare income and expenditure accounts using Generally Accepted Accounting Principles for your rental business, noting which expenses are capital and HMRCs recent change in the treatment of white goods. The results end up on HMRCs tax return.

konn1ch1ha

Pennywise wrote: »

The SA return is a series of boxes you need to fill. Gross rental income will be in one box and the allowable expenses will be in other boxes according to their nature.

Why are you happy to pay for an agent to manage the property, but seemingly not willing to pay for an accountant to do your tax return? Some things are best left to the professionals. From your post, it doesn't sound like you have any idea about tax and tax returns, so you're going to have to spend a lot of time researching it and risking making mistakes if you want to do it yourself.

I am willing to pay agents to manage the property because 1) I do not live in the same city as the property 2) I do not have time to travel and manage it myself.

I have been very tempted to appoint an accountant but, as we all are, I am trying to save money and I believe it's a good learning curve being able to sort your own taxes. So would I do my taxes all online if I was to submit for the online submission deadline?

konn1ch1ha

Cook_County wrote: »

You prepare income and expenditure accounts using Generally Accepted Accounting Principles for your rental business, noting which expenses are capital and HMRCs recent change in the treatment of white goods. The results end up on HMRCs tax return.

Sorry, what are 'white goods' and 'capital'? ELI5. Thanks!

CLAPTON

konn1ch1ha wrote: »

Sorry, what are 'white goods' and 'capital'? ELI5. Thanks!

white goods are things like fridges, washing machines etc

some expenditure is considered capital and is NOT allowable against profit but is allowable against capital gains tax when/if you ever sell the property
broadly things that improve the property are considered capital whilst things that repair or maintain the property can be set against rental income. In many cases there is no clear logic and you just have to know HMRC rules

konn1ch1ha

Cook_County wrote: »

You prepare income and expenditure accounts using Generally Accepted Accounting Principles for your rental business, noting which expenses are capital and HMRCs recent change in the treatment of white goods. The results end up on HMRCs tax return.

Say if I the gross profit is £625pm, but the estate agents take 10% + VAT, that leaves me with £550 net.

Which is the capital/expenditure? And what do I pay tax on? The £625 or £550?

CLAPTON

konn1ch1ha wrote: »

Say if I the gross profit is £625pm, but the estate agents take 10% + VAT, that leaves me with £550 net.

Which is the capital/expenditure? And what do I pay tax on? The £625 or £550?

it's not clear you understand what profit is.


you work out your yearly rental income
you work out your allowable (noncapital costs) i.e. estate agents fees, gas safety checks, any maintenance or repairs


take one from the other and you get your profit on which you are taxed


capital costs : you simply keep a record of these (if any) so when you sell you can set these against your capital gains