Paying Tax on Rental Income

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Matt_F
Matt_F Posts: 9 Forumite
in Cutting tax
Now i've done some research but its not all plain sailing so just after some clarity more than anything.

am i right in thinking that if i am away travelling the world for the whole of a tax year, where i have no other income other than the my rent on my house, i dont pay any tax as i make no profit on it.

it basically pays the amount my mortgage is each month, and over the year only amounts to £6,720, so i would be well under the tax threshold. Would i still inform them about this or not?

Also, if I was to come back and start a little into a new tax year, I would just inform HMRC, that I was now working and also renting my house out. Gathering they would just alter tax code accordingly.

Any help or advice would be much appreciated

thanks

Matt

Comments

  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
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    Your "mortgage" is not an allowable expense.

    Some of the loan interest may be.

    Will you be entitled to the Personal Allowance for the tax year you are referring to?
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
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    Matt_F wrote: »
    Now i've done some research but its not all plain sailing so just after some clarity more than anything.
    so you have done very little research
    Matt_F wrote: »
    am i right in thinking that if i am away travelling the world for the whole of a tax year, where i have no other income other than the my rent on my house, i dont pay any tax as i make no profit on it. that is a silly statement since it does not include any figures therefore cannot be applicable to all possible contexts. Of course you remain LIABLE for tax, whether you have any to pay is down to the numbers...

    it basically pays the amount my mortgage is each month, and over the year only amounts to £6,720, so i would be well under the tax threshold. Would i still inform them about this or not? potentially yes, how much net profit are you making ? Have you understood the interest v repayment aspect of eligible cost?

    Also, if I was to come back and start a little into a new tax year, I would just inform HMRC, that I was now working and also renting my house out. No, utterly wrong. As a non resident LL you are required to submit a tax return whilst non resident (google it...)

    Any help or advice would be much appreciated

    thanks

    Matt
    see above, you have much to learn
  • Matt_F
    Matt_F Posts: 9 Forumite
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    i said i've done some research, but yes maybe i do need to do a lot more. I'm sorry if the questions were "silly", but to be honest i wasn't really sure where to start with some of it hence why i was asking. I read some things but they were misleading or not really relevant to what i was trying to find out. If i'm honest its a little confusing, so I apologise if my questions were completely wrong.

    what kind of figures do your need? my mortgage is £560 per month, charge the same for the rent. Have around 25% equity in my property, 90k left on mortgage

    As for net profit & allowable expenses it would only really be the landlord insurance and boiler service that I could offset, so only £300 per year off the total which would come to £6,420 profit. I've checked this and it says £11,000 and under = 0% tax

    Thanks again
  • Pennywise
    Pennywise Posts: 13,468 Forumite
    Name Dropper First Post First Anniversary
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    If you're non resident, your letting agent should be deducting basic rate tax from your rent and paying it over to HMRC. You then have to submit a tax return to HMRC to reclaim any overpaid tax. Are your letting agents not doing this??
  • chrismac1
    chrismac1 Posts: 2,585 Forumite
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    There may not be a letting agent. I have various overseas client where a relative or friend is keeping an eye on things at the rental.
    Hideous Muddles from Right Charlies
  • Matt_F
    Matt_F Posts: 9 Forumite
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    i wouldn't be using an agent, as have enough friends local to help out if needs be. The money would just be put straight into my account ready for the mortgage to be taken out
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
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    Matt_F wrote: »
    i wouldn't be using an agent, as have enough friends local to help out if needs be. The money would just be put straight into my account ready for the mortgage to be taken out
    so you'll register with HMRC under the Non Resident Landlord Scheme as that is what you must do if you have no agent.
    https://www.gov.uk/government/publications/non-resident-landlord-application-to-have-uk-rental-income-without-deduction-of-uk-tax-individuals-nrl1
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