Fines for self assessment on rental income

steampowered

You may need to pay:

- Income tax on rent received.
- Capital gains tax on profit made when you sold the property (if applicable).

As it sounds like you have not disclosed the full details of your circumstances to HMRC as you did not full in a tax return, you now need to do some basic research to acquaint yourself with what tax you should have paid.

It may be that your actual tax liability exceeds the £700 mentioned in the paperwork you've received to date. HMRC are not psychic, remember.

Then, you need to work how how to deal with the penalties.

steampowered

anxiouscharlie wrote: »

I’m thinking it probably wasn’t the right forum for this, thanks to those of you that were understanding.

It is the correct forum.

However, it seems that you have almost no understanding of your tax obligations. Realistically you need to have at least a little bit of knowledge - and a bit of willingness to educate yourself - for us to help you.

In the circumstances, I think you should pay an accountant to sort this out for you.

theartfullodger

NB. There are at least 10 taxes a landlord may have to pay. Buy a book on property tax - it will save more time & money than it costs to get and read.

anxiouscharlie

Thanks everyone, just spoken briefly to an accountant and turns out we had no need to fill in a tax return as she was under the profit threshold, which is what HMRC told us last year. Anything between 1000-2500 would be deducted by PAYE, which is what they said they were going to do. No tax return necessary, so no penalties are applicable. We will be sitting down with the accountant in the week as even if they are now requiring tax returns these will show no tax due and we have grounds to appeal the penalties. Thanks for all the advice.

steampowered

Did you establish whether you need to pay capital gains tax?

If not, you need to check.

Dazed_and_confused

You might have had no need to file a return but that time had passed.

A return (or returns) has/have been issued and the PAYE side of things is of no consequence now.

Any tax owed for years to 05:04:2018 will have to be paid direct to HMRC, it is no longer possible for the tax to be included in the PAYE code.

The 2017:18 return had to be filed by 30 December 2018 for this to be possible.

How do you know no tax will be due?

anxiouscharlie

Because she is under the profit threshold. And no, according to our accountant there is no capital gains. We will speak to HMRC as soon as they open tomorrow.

Dazed_and_confused

What profit threshold?

If she has other income and the tax on that was correct then any profit results in a Self Assessment liability.

The changes to tax relief on finance costs mean even if you don't think there was a "profit" there may well have been one for tax purposes. This might be reduced by the finance costs tax credit but if she has even just a small amount of tax due it would all be payable direct. It cannot be paid via her tax code now.

anxiouscharlie

It was up to HMRC to change her tax code when we notified them. We were told there was no self assessment to fill out and we have not revived a tax return to fill in until now. Profits for rental income under £1000 have no tax due, profits for £1000-2500 are to be taken from PAYE. We are definitely below £2500, we might even be below £1000. Thanks all, bowing out of this thread now until we have spoken to HMRC and met with our accountant in the week.

Dazed_and_confused

Profits for rental income under £1000 have no tax due profits for £1000-2500 are to be taken from PAYE

That is completely wrong.

You are confusing income and profit.

And unless you have a TARDIS you cannot have rental income from 2017:18 included in a tax code. HMRC won't change the 2019:20 tax code to include rental income from 2017:18.

I hope for your sake the accountant you have picked has a better understanding than you have managed so far.