Confused about Tax Obligations

newlandlord555

Owns 1 property which is letting out for 600 a month  with 100 a month going to agent. Has also a part time job earning about 500 a month. Does he have to declare income for tax purposes or is it all done by his employer? Not sure if his employer knows anbout the flat he rents out.

eskbanker

newlandlord555 said:

Owns 1 property which is letting out for 600 a month  with 100 a month going to agent. Has also a part time job earning about 500 a month. Does he have to declare income for tax purposes or is it all done by his employer? Not sure if his employer knows anbout the flat he rents out.

I can't think of any reason why the rental income would be visible to an employer, so the tax due won't be collected via PAYE* and self-assessment will be required:

https://www.gov.uk/check-additional-income-tax

* edit: it may ultimately be collected via coding adjustment in subsequent years, but only after HMRC have been told about it!

saajan_12

newlandlord555 said:

Owns 1 property which is letting out for 600 a month  with 100 a month going to agent. Has also a part time job earning about 500 a month. Does he have to declare income for tax purposes or is it all done by his employer? Not sure if his employer knows anbout the flat he rents out.

Who's "he"?
The employer isn't going to deduct specifically for the rent. They'll just use the tax code they're told, and any adjustments if there's varying income or non salary income, are done separately with HMRC. 

On the rent, tax is due on the rental income less non financing expenses - so not just the agent fee, but also repairs costs, deposit protection fee, insurance, etc. Then he might be able to get partial relief on the mortgage interest if any. 

sheramber

The person in receipt of the income is  the person with the tax obligations.

NannaH

If he only earns £500 a month, his employer may not have even have him registered under PAYE as he earns under the LEL threshold . 

He won’t pay any tax or NI and he won’t be getting NI credits either, at the moment. 
It sounds like his total income is under the Personal allowance for tax but with his rental income his employer may need to know about it / check if he needs registering for PAYE.   

I don’t know if rental income counts when it comes to paying NI.  

NannaH

He may need to register for self assessment as a landlord as he’s technically running a business.  

[Deleted User]

NannaH said:

If he only earns £500 a month, his employer may not have even have him registered under PAYE as he earns under the LEL threshold . 

He won’t pay any tax or NI and he won’t be getting NI credits either, at the moment. 
It sounds like his total income is under the Personal allowance for tax but with his rental income his employer may need to know about it / check if he needs registering for PAYE.   

I don’t know if rental income counts when it comes to paying NI.  

Rental income, not being earned income, does not attract NI. 

There are no circumstances where an employer needs to know about rental income. The employer will operate PAYE based on what the employee has entered on the employee starter form and what code results from that when submitted to HMRC

newlandlord555

If his total earnings from part time job plus rental income are below the tax threshold of 12,900 a year does he need to do anything or inform anyone ?

sheramber

The personal allowance is £12570  not @ £12900

He can check here if he needs to register for self assessment 

https://www.gov.uk/check-if-you-need-tax-return