Concerned about tax

Fiveinourhouse

So my husband and I struggled to sell our flat. We had help from a financial advisor and to cut a long story short we now rent out our flat and live in our new family home.
My concern is that we currently pay no additional tax on the rental property. The financial advisor hasn’t mentioned this but looking online surely this is something that we are legally required to do.
Please forgive my ignorance we didn’t ever want to be landlords but found after three years of trying to sell we were desperate.
The flat is rented out for £550 per month.
Can anyone advise as to how much tax we should be paying and how we go about it?
I’m really concerned that we get this right.
Thank you

[Deleted User]

Fiveinourhouse wrote: »

Can anyone advise as to how much tax we should be paying and how we go about it?

How much depends on lots of things, it is income based just like income tax on your salary but you only declare the profit, not the full £550 - HMRC have a guide to what you can offset.

You go about it by registering for self assessment with the HMRC.

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

dancing_star

Fiveinourhouse wrote: »

So my husband and I struggled to sell our flat. We had help from a financial advisor and to cut a long story short we now rent out our flat and live in our new family home.
My concern is that we currently pay no additional tax on the rental property. The financial advisor hasn’t mentioned this but looking online surely this is something that we are legally required to do.
Please forgive my ignorance we didn’t ever want to be landlords but found after three years of trying to sell we were desperate.
The flat is rented out for £550 per month.
Can anyone advise as to how much tax we should be paying and how we go about it?
I’m really concerned that we get this right.
Thank you

I'd advise making a disclosure under the Let Property Campaign


https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure/let-property-campaign-your-guide-to-making-a-disclosure


Set up for dealing with landlords who never registered for self assessment


It'll be a voluntary disclosure so if there is any tax liability then the added interest/penalty will be at a lower rate than if it was HMRC who found out and chased you for it.


The forms are easy enough to work out but if you are unsure then go along to an accountant (Chartered Accountant - ACA or ACCA not some random bookkeeper) practice who will be able to help. I've done it for 'walk in' clients before. If you're not sure which accountant to approach maybe the IFA could suggest a few?

[Deleted User]

Anything will sell if priced correctly and rental income is subject to income tax. I'd do as dancing_star suggests and disclose your rental income under the Let Property Campaign. Is there anything else as a landlord you have forgotten to do such as protect the deposit, rent to rent checks, gas safety checks, etc?

Fiveinourhouse

What are rent to rent checks? When you go into inspect the property? We have done that and protected the deposit and the gas safety check. We tried to sell and dropped twenty grand off the valuation on a 105k flat. I’m not looking to discuss if I should have sold it though I’m looking for advice regarding tax. Thank you for the help so far.

G_M

You should be declaring the income via a self-assessment declaration. That is whether tax is payable or not (which depends on many factors).


You will also be liable for Capita Gains Tax when you sell.


Additional SDLT was due when you bought your 2nd property.


What else have you overlooked in your property business? See


* New landlords (1):advice & information :see links in next post

* New landlords (2): Essential links for further information

* Letting agents: how should a landlord select or sack?

Fiveinourhouse

We have sold the property and payed both of those initial taxes. The flat is now being rented but I was looking at info about the tax we are due on income.

[Deleted User]

Fiveinourhouse wrote: »

What are rent to rent checks? When you go into inspect the property? We have done that and protected the deposit and the gas safety check. We tried to sell and dropped twenty grand off the valuation on a 105k flat. I’m not looking to discuss if I should have sold it though I’m looking for advice regarding tax. Thank you for the help so far.

That's a typo, I meant right to rent checks.

If you don't want to discuss whether you should have sold the property then it wasn't wise to post that you couldn't sell it and that you never wanted to be a landlord as an excuse for not declaring the rental income.

[Deleted User]

Fiveinourhouse wrote: »

We have sold the property and payed both of those initial taxes. The flat is now being rented but I was looking at info about the tax we are due on income.

No one here can tell you how much tax is due. All you've given is the rental income which isn't enough information. You need to check your records and find out what legitimate expenses you can use. Then there's your income from other sources and how the property is owned by you both.

It might be worth getting an accountant to untangle it if you're not confident about doing it yourself.

zagubov

Lover_of_Lycra wrote: »

It might be worth getting an accountant to untangle it if you're not confident about doing it yourself.

I'd second that advice.

You will be liable to all sorts of tax if you let this run on. You may have to complete more than one tax return; has this rental been spread over more than one tax year?

dimbo61

You really need to employ an accountant for this.
He/she can help you work out how much you may have to pay and what expenses are allowed from the Income.
Fun being a Landlord