Predicting how much tax I'll pay from my rental this current financial year

Bobby_Peel

Hi,

I wonder if anybody can help me guess a rough estimate on how much extra tax I'll have to pay this year?

This year will be the first year I've had a full years rentals income and I'm on a higher wage.

Below are my past 3 years figures with me estimating this year.

For the job and rental, this is the profit or net as I've deducted the tax etc 

Tax Bracket				Profit/Loss
Basic 20%	Higher Rate 40%		Year	Job	Photography	Rental	Total	Tax Paid
£0 - 34,500	£34,501 - £150,000		18/19	46396	3250	0	49646	1282.4
£12,501 to £50,000	£50,001 to £150,000		19/20	42312	2995	0	45307	600.4
£12,570 to £50,270	£50,270 to £150,000		20/21	40313	-2335	6800	44778	130.2
£12,571 to £50,270	£50,271 to £150,000		21/22	44900*	-500	6957	51357*	?
				*Estimate

Thanks

Dazed_and_C0nfused

Think you'll need to reformat that for it to make sensible reading.

[Deleted User]

Dazed_and_C0nfused said:

Think you'll need to reformat that for it to make sensible reading.

Turning my iPhone sideways (🤔) we have:

Salary: 44900
Photography: Loss 500
Rental - 6957
Total - 51357

for 2021/22

Not sure what the op means by ‘extra tax’

Bobby_Peel

Sorry, trying to change it and it looks fine but when I post it doesn't look the same!

Bobby_Peel

purdyoaten2 said:

Dazed_and_C0nfused said:

Think you'll need to reformat that for it to make sensible reading.

Turning my iPhone sideways (🤔) we have:

Salary: 44900
Photography: Loss 500
Rental - 6957
Total - 51357

for 2021/22

Not sure what the op means by ‘extra tax’

As the 44900 comes from my employer, the PAYE etc is already sorted.

I submit a self assessment each year for the photography & rental property and the last column (Tax Paid) was how much I had to pay HMRC for each of those years.

I'm trying to work out how much I'll pay for this year if it's possible.

Dazed_and_C0nfused

Will you be claiming a tax deduction for finance costs relating to the property income?

Bobby_Peel

How do you mean sorry? I include my expenses etc in the costs for the rental.

Jeremy535897

£51,357- £50,270= £1,087 at 40% = £43.48, £6,957-£1,087=£5,870 at 20% = £1,174, total £1,217.48 (might be a little more due to coding roundup), assuming you claim the photography loss against other income in 2021/22 (and therefore don't use the cash basis). Good time to buy a nice new camera for around £1,087?

Dazed_and_C0nfused

Bobby_Peel said:

How do you mean sorry? I include my expenses etc in the costs for the rental.

You can no longer claim finance costs such as mortgage interest as an expense against rental income.  You get a fixed tax deduction instead which means your profits could be greater than you currently think.

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/property-income/renting-out-property#toc-how-is-tax-relief-for-interest-and-other-finance-costs-restricted-

Bobby_Peel

Jeremy535897 said:

£51,357- £50,270= £1,087 at 40% = £43.48, £6,957-£1,087=£5,870 at 20% = £1,174, total £1,217.48 (might be a little more due to coding roundup), assuming you claim the photography loss against other income in 2021/22 (and therefore don't use the cash basis). Good time to buy a nice new camera for around £1,087?

I think this is exactly what I was looking for. So just so I'm sure how it's worked out is...

£51,357 (Total earned) - £50,270 (Tax Bracket) = £1,087 (Amount at 40% Tax Bracket) at 40% = £434.8
£6957 (Rental & hasn't been through Employee and needs submitted) - £1,087 (Amount over tax bracket) = £5870 @ 20% = £1087 + 434.80 = £1521.80

So its £434.80 which is at 40% and working out the difference at 20% to pay which is £1087?

Bobby_Peel

Dazed_and_C0nfused said:

Bobby_Peel said:

How do you mean sorry? I include my expenses etc in the costs for the rental.

You can no longer claim finance costs such as mortgage interest as an expense against rental income.  You get a fixed tax deduction instead which means your profits could be greater than you currently think.

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/property-income/renting-out-property#toc-how-is-tax-relief-for-interest-and-other-finance-costs-restricted-

Ahh I see what you mean. I was aware I couldn’t claim the mortgage interest but not the full detail of the tax deduction.