Rental tax advice

sprayway

Hi all,
Was wondering if anyone could help please?
I moved into my partners house in 2017 and so rented my house out under a consent to lease. The rental income did not cover the mortgage payment (around £100 short each month). I have never submitted a tax return in regards to this or paid any tax.
I have now switched mortgage to a buy to let and will obviously need to be paying tax on the rental income. My question is would the previous couple of years rental need to be taken in to account? I.e. would the fact I was technically losing money be deductible against my new tax?
Thanks

theartfullodger

You need to contact HMRC URGENTLY and explain what you have done & that would will be shortly submitting tax-returns for 2017/2018 & 2018/2019. Hopefully this might reduce the fines and penalties that they can rightly impose on those evading the system: (for whatever reason)

There are many expenses you can also declare (eg insurance, maintenance etc..) to reduce tax-bill. For mortgage it is only mortgage INTEREST you can claim, not full payments to a repayment mortgage.

And even if you had made a loss you need to declare this to avoid fines etc AND so you carry forward losses and reduce tax-bill in future.

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

So you really really had no idea that having an extra income needed declaring for income tax purposes? Amazing......

Artful: Landlord since 2000: Have been fined in the past for late submission but I knew fine well how stupid I was being and that it would hurt.

PS Don't forget to also keep records for CGT purposes for items you can't use against income tax: There are at least 10 taxes a landlord may pay: Buy a book on property tax, save money, stay legit.

[Deleted User]

sprayway wrote: »

Hi all,
Was wondering if anyone could help please?
I moved into my partners house in 2017 and so rented my house out under a consent to lease. The rental income did not cover the mortgage payment (around £100 short each month). I have never submitted a tax return in regards to this or paid any tax.
I have now switched mortgage to a buy to let and will obviously need to be paying tax on the rental income. My question is would the previous couple of years rental need to be taken in to account? I.e. would the fact I was technically losing money be deductible against my new tax?
Thanks

Yes, you should have been declaring the rental income. If you had a repayment mortgage the capital portion of the repayment is not a business expense so you may well have been making a profit.

AdrianC

sprayway wrote: »

I moved into my partners house in 2017 and so rented my house out under a consent to lease. The rental income did not cover the mortgage payment (around £100 short each month). I have never submitted a tax return in regards to this or paid any tax.

Oops.

I have now switched mortgage to a buy to let and will obviously need to be paying tax on the rental income.

Whether you had CtL or a BtL mortgage doesn't affect your legal requirement to declare all your income (before allowable expenses) for tax. If you really did make a loss (after allowable expenses), you could have offset that against other sources of income.

My question is would the previous couple of years rental need to be taken in to account? I.e. would the fact I was technically losing money be deductible against my new tax?

Not for previous tax years. You've already told HMRC that there was no property letting income in those years.

It's probably a question more appropriate in the tax forum - https://forums.moneysavingexpert.com/forumdisplay.php?f=22

csgohan4

OP

please read thread Here

On obligations as LL which are by law must have. I hope you have done those as well

AdrianC

Thinking about it - if it was only rented out in 2017, then you're probably only one tax year short - you've got almost a fortnight to get your 2018/19 SA organised and submitted.

G_M

AdrianC wrote: »

Thinking about it - if it was only rented out in 2017, then you're probably only one tax year short - you've got almost a fortnight to get your 2018/19 SA organised and submitted.

depend sin which month in 2017 the tenancy started: before or after April.

G_M

** Tenancies in Eng/Wales: Guides for landlords and tenants


This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* 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?

G_M

sprayway wrote: »

I moved into my partners house in 2017 and so rented my house out under a consent to lease. which month?
The rental income did not cover the mortgage payment (around £100 short each month). I have never submitted a tax return in regards to this or paid any tax.
you received income. You had to declare this even if no profit (as efined by HMRC) was made.
Do so ASAP!

I have now switched mortgage to a buy to let
irrelevant

and will obviously need to be paying tax on the rental income.
The situation has not changed. Both before and after switching mortgage you were receiving rentalincome.

My question is would the previous couple of years rental need to be taken in to account? I.e. would the fact I was technically losing money be deductible against my new tax?

No. Income each year is assessed independantly of previous years.

eg I am unemployed and have no income so pay tax (on my benefits) at the lowest rate.

Next year I get a well-paid job and am in the higher tax bracket. I cannot reduce my tax liability by claiming that last year my income was way below the threshold for higher rate tax!

AdrianC

G_M wrote: »

depend sin which month in 2017 the tenancy started: before or after April.

Indeed. Hence the "probably".