Below are the most common questions we have been asked regarding tax and accountancy. If you cannot find the answer you are looking for, please click here to contact us directly.
Many individuals who are letting a property fall under the misconception that if the expenses cover the rents they receive, then they have nothing to declare to H M Revenue & Customs. Unfortunately, this is not the case.
If you are letting a property and receive rental income then you are required to notify HMRC within 6 months of the end of that tax year. So for example if you commence to let a property in June 2011 you have until 5th October 2012 to inform HMRC. Failure to do so can result in penalties being charged equivalent to the amount of tax liability due on the income.
Depending on the amount of rents you are receiving will depend on whether you will be required to file a self assessment tax return, or whether HMRC can include a restriction in your PAYE tax code to collect the tax due. The self assessment guidelines state that if you have income from property of £2500 (after deducting allowable expenses) you will be required to complete a tax return. However, even if you do not have to file a return, you will still be required to notify HMRC of any rental income you receive below this figure.
Some landlords who do not use a landlords' accounting service believe that if the mortgage payments for the property exceed the rental income received, they will not be required to declare the income as they are not making a profit, but this is not true and the following are areas of concern:
Yes you can. All your UK property interests are treated as one property business. So the net income from your own properties is amalgamated with your share of income and expenses from the jointly held properties, and the total needs to be reported on the property pages of your tax return. H M Revenue & Customs will not treat jointly held let properties as being a partnership, unless the letting of the property is ancillary to a proper trading business.
With effect from April 2011 to be regarded as a furnished holiday letting the property must be furnished and the letting must meet all three of the following qualifying tests:
From April 2012 loss relief against general income and terminal loss relief cannot be claimed for income tax purposes. The loss can only be set against income from the same UK or EEA furnished holiday lettings business.
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