Accidental Landlord, Do I pay tax?

greatcrested

I accidentally travelled at 80 miles per hour on the M1. Sadly the police did not see it that way.

OP - If you decide to let out your property, whether as an investment or to cover costs whilst abroad or for any other reason, all taxes still apply.

Income tax - yes (though of course there are allowances - either do research before submitting your tax return, or employ an accountant).

2nd property SDLT - yes, if you buy a 2nd property (though there are exemptions based on value as well as whether you are selling your main residence etc. either do research before submitting your SDLT return, or employ an accountant or solicitor).

Capital Gains Tax - Yes, if it's not your main residence (though there are allowances for periods when it WAS your main residence, plus other allowances, plas an annual allowance - either do research before submitting your tax return, or employ an accountant). Note you have to submit the CGT tax return and pay the CGT within 30 days of the sale.

As a landlord (accidental or by choice), you also have to comply with many laws and regulations. See:

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

(note: it's possible some gov websites have errors - there are ways to report this for the ivil service to review/amend. If you give us the link to the site you think may be wrong, or which contradicts information you are receiving here, we can comment)

IAMIAM

Thats great advice, thanks. I sense my CGT won't be as much as I envisaged based on above.
It seems to be around 20% or so on the sale profit minus expenses. So if my property goes up in value by 30k for example, and I have let it out for a third of the time I was the owner. I would pay the tax on 10k minus expenses/reliefs, but my actual capital that the tenant has been paying (buy to let or consent to let) would remain as mine fully. 

greatcrested

IAMIAM said:

Thats great advice, thanks. I sense my CGT won't be as much as I envisaged based on above.
It seems to be around 20% or so on the sale profit minus expenses. So if my property goes up in value by 30k for example, and I have let it out for a third of the time I was the owner. I would pay the tax on 10k minus expenses/reliefs, but my actual capital that the tenant has been paying (buy to let or consent to let) would remain as mine fully. 

You are confusing income tax and CGT. What the tenant pays you in rent is subject to income tax. It has no relevance at all to CGT.

CGT as levied at either 18% or 28% (depends on your tax rate).

Your annual allowance is currently £12K I beieve.

For precise figures, and a calculator, see gov website.

macman

CGT is 18% or 28%, depending on your marginal tax rate. Not 20%.
If you are abroad for more than 6m, income tax must be collected by your tenant or letting agent, and paid via the non-resident landlord scheme.
No idea what you mean by 'my actual capital that the tenant has been paying would remain mine fully'. The tenant pays rent (in your case with the tax deducted and passed to HMRC), that rent is taxed as part of your income.

greatcrested

macman said:

If you are abroad for more than 6m, income tax must be collected by your tenant or letting agent, and paid via the non-resident landlord scheme.

A good point, explained fully in the link I provided earlier:

Post 7: New landlords (1):advice & information :see links in next post

Crashy_Time

DiamondLil said:

How can anyone be an 'accidental landlord' ?  How does becoming a landlord qualify as an accident ?  The landlord makes a conscious decision to either live in, sell or let the property he/she owns. 

Because many people consider a price drop as just not something that they can entertain, so any other alternative seems natural to them, although many (most?) AL`s don`t have the first clue about being a landlord, they plough ahead anyway so as to not "lose" money, and many end up getting themselves into a right old pickle judging by some of the threads on here! One silver lining of the present crisis is that it is going to be much much harder to "just rent it out".

theartfullodger

So you "accidentally" signed that tenancy agreement?

How dumb do you think all other members here are or indeed HMRC are, please?

MovingForwards

https://forums.moneysavingexpert.com/discussion/6138149/what-are-the-tax-income-or-other-implications-on-renting-out-my-property-to-move-for-work/p1

Perhaps have a read through all your other threads and see what information you were previously provided with. The above is just one of them.

AdrianC

theartfullodger said:

So you "accidentally" signed that tenancy agreement?

How dB do you think all other members here or indeed HMRC are, please?

I don't know about you, but I know that I've woken up MANY times after a night on the beer and had that dawning realisation of having bought a house and started a residential lettings business without even realising...

Oops! Ah, what larks!

steampowered

As you will be living abroad, you may find that the tenant / letting agent are legally required to deduct 20% from the rent and pay it to HMRC.

Read: https://www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad
https://www.gov.uk/tax-uk-income-live-abroad/rent