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BTL how to calculate tax on profit and income?

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funnymonkey
funnymonkey Posts: 233 Forumite
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in House buying, renting & selling
Can anyone help.me please?
I with the new rules being phased in over the next 4 years how do you calculate your profit and btl income for taxation purposes as you can't be taxed both?
Thank you
«13

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  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    funnymonkey wrote: »
    how do you calculate your profit and btl income for taxation purposes
    by reading the guide?

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

    https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies
  • funnymonkey
    funnymonkey Posts: 233 Forumite
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    Thank you for your reply but it doesn't help me as I understand these individually but I don't understand how to work out my tax when say for example I make 5 thousand profit.
    Now your being rated on the full rental.income do you just pay tax on that and ignore the profit.
    If you paid tax on the rental.income and the profit you would effectively being taxed twice for the same thing.
  • movilogo
    movilogo Posts: 3,186 Forumite
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    If you paid tax on the rental.income and the profit you would effectively being taxed twice for the same thing.

    Effectively under new rule, rental income is the profit. So you pay tax on this.

    Your taxable rental income is = Rent - allowable expenses but not interest payment
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
  • elverson
    elverson Posts: 808 Forumite
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    If you can't work this out you shouldn't be a landlord tbh.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    http://www.mortgagesforbusiness.co.uk/news-insight/2015/july/how-the-restriction-of-relief-on-btl-mortgage-interest-will-affect-landlords/
  • buglawton
    buglawton Posts: 9,235 Forumite
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    elverson wrote: »
    If you can't work this out you shouldn't be a landlord tbh.
    Just get a bookkeeper to do it all for you and put the cost of the bookkeeper into the costs. Ignore the snobs who think BTL is only for the elites, it's for any well funded person who wants alternatives to invest in for a future where the state (cue May) wants to slash support for the elderly.

    Just make sure you collect all receipts and record all BTL-related mileage.

    Rules changed not only about interest but also the 10% furnished allowance is replaced by real costs. I now collect all receipts and will probably be booking more that 10% due to some appliance replacements and repairs, not to mention mileage during the refurbs.

    The 10% on furnished BTLs was introduced to cut the cots of tax collection by hugely simplifying the process. Thanks to Cameron we're now going full circle.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    buglawton wrote: »
    Just get a bookkeeper to do it all for you and put the cost of the bookkeeper into the costs. Ignore the snobs who think BTL is only for the elites, it's for any well funded person who wants alternatives to invest in for a future where the state (cue May) wants to slash support for the elderly.

    Just make sure you collect all receipts and record all BTL-related mileage.

    Rules changed not only about interest but also the 10% furnished allowance is replaced by real costs. I now collect all receipts and will probably be booking more that 10% due to some appliance replacements and repairs, not to mention mileage during the refurbs.

    The 10% on furnished BTLs was introduced to cut the cots of tax collection by hugely simplifying the process. Thanks to Cameron we're now going full circle.


    The reality is that BTL was becoming a "thing" for nearly half the adult population, most without any financial savvy, and based on lending that doesn`t stack up if house prices drop? That is why the government want to shut this circus down.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    edited 19 May 2017 at 7:05PM
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    funnymonkey wrote: »
    Thank you for your reply but it doesn't help me as I understand these individually but I don't understand how to work out my tax when say for example I make 5 thousand profit.
    Now your being rated on the full rental.income do you just pay tax on that and ignore the profit.
    If you paid tax on the rental.income and the profit you would effectively being taxed twice for the same thing.
    I am sorry but if you really cannot follow the very dumbed down level at which the info on the .Gov.UK website is now presented then pay a professional accounts person to help you

    i am not going to write it all out for you when it is there to be read, I can only assume you want to be spoon fed since you can obviously read.

    What do you not understand about case study 1, showing the position pre and post the rule change?
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    http://www.telegraph.co.uk/property/buy/buy-to-let-calculator-how-will-new-tax-reduce-your-profit/
  • buglawton
    buglawton Posts: 9,235 Forumite
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    Crashy_Time wrote: »
    The reality is that BTL was becoming a "thing" for nearly half the adult population, most without any financial savvy, and based on lending that doesn`t stack up if house prices drop? That is why the government want to shut this circus down.
    It's been such an unsuccessful 'thing' that the govt needs to pass special budgetary measures to shut it down?

    But the number of people popping up to say that it's only for the 'experts' isn't going down, for sure.
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