Tax credits and declaring rental income

Debster1616

I wanted advice regarding claiming tax credits and being a landlord who is receiving rental income.....
various phone calls to the tax credits helpline give conflicitng information. Some agents tell me its the total rental income that needs to be delcared to tax credits. Other agents say you can deduct all expenses such as maintenance, insurance and even mortgage interest. Another agent has told me today that only essential maintenance can be deducted (no insurance or mortgage interest).
There are no guides on the GOV.UK website to help either. Just says property income must be declared with no specific notes on it.
Please can anyone advise what it correct?
Thanks

Darksparkle

https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm04006

sheramber

https://www.gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm04006

Post 6 April 2017

Following changes to tax legislation, the way a person!!!8217;s income tax liability is calculated in respect of their rental income no longer reflects that used for the purposes of tax credits.

When calculating their income tax liability a person will only be able to include a percentage of their finance costs (e.g. mortgage interest) as an allowable expense. The percentage rate will decrease over a period of four years until no relief will be available from 2020/21. These rates will be applied as follows:

2017/18 75%

2018/19 50%

2019/20 25%

2020/21 Nil

For the purposes of tax credits, a person will still be able to deduct 100% of their finance costs when calculating their allowable expenses for property income.

Debster1616

Many thanks for this information. It!!!8217;s really helpful. I still cannot believe the advice the tax credits advisers are giving out! It!!!8217;s completely incorrect. I have printed out the online chat I had with the advisor in which they tell me I cannot deduct mortgage interest. Good job I didn!!!8217;t take their word for it!

Darksparkle

They aren't tax trained for the most part which has always been an issue. Do you not complete a self assessment?

Dazed_and_confused

They aren't tax trained for the most part which has always been an issue

Doesn't that make it even worse? If they only know about tax credits and not income tax then they should at least know the rules for tax credits?

Darksparkle

Dazed_and_confused wrote: »

They aren't tax trained for the most part which has always been an issue

Doesn't that make it even worse? If they only know about tax credits and not income tax then they should at least know the rules for tax credits?

As I said, it's always been an issue. But as the links show, the rules are the income tax rules and tax credit follows those. There is plenty of help available to understand those rules and notes available for completing SA. There's only a slight change in relation to tax credits which only came in 2017.

Debster1616

Darksparkle wrote: »

They aren't tax trained for the most part which has always been an issue. Do you not complete a self assessment?

Yes I do an online self assessment also for my rental property. I find this has a lot more help as I’m going through each section and examples of what is allowable as deductions. The online tax credits page doesn’t even have a field for ‘other income’. You have to ring up the helpline to get it added which can be a long long wait!

Debster1616

Are other expenses like landlords insurance and repairs allowed to be deducted before you submit a rental income figure to tax credits? I now understand that mortgage interest is deductible...

Darksparkle

Debster1616 wrote: »

Are other expenses like landlords insurance and repairs allowed to be deducted before you submit a rental income figure to tax credits? I now understand that mortgage interest is deductible...

Did you read the links we posted?

Debster1616

I couldn’t find any mention about insurance and maintenance expenses. Only the link took me to information about mortgage interest