I purchased my first property in January 2017, and it has been on rent since February 2017. It took me four weeks to renovate before renting. It is now time to file my form for tax credits, which I receive as I have three children under the age of 11. I am employed; however, my wife isn’t, and we receive child benefit and child tax credit. My queries are: (1) When do I need to inform HMRC about the property (as although I earn rent, I have a buy-to-let mortgage to pay)? (2) What can I claim back, if anything, in taxes? (3) What do I need to submit to HMRC. (4) Do I need an accountant or do I submit myself online. (5) How much is the accountant fee? Basically, I am a new landlord, any advice would be most appreciated.
Arthur Weller replies:
(1) If your net rental income (i.e. gross rental income you receive from the tenant, less allowable expenses) is more than zero, and it is not covered by your income tax personal allowance, then you need to pay tax on this net rental income, and you need to inform HMRC about the rental income. This is usually done by completing the UK Property supplementary pages of the self-assessment tax return. However, even if it covered by your personal allowance, and so there is no tax to pay on this rental income, if the gross rental income is £10,000 or more, or the net rental income is £2,500 or more, you must inform HMRC about the rental income on a tax return. If less than £2,500, you need to tell HMRC, but you don’t need a tax return. See www.gov.uk/renting-out-a-property/paying-tax. (2) See there for allowable expenses, or www.gov.uk/hmrc- internal-manuals/property-income-manual/pim2050 for more information. There are special rules for interest paid by residential landlords, from April 2017 (see www.gov.uk/hmrc-internal-manuals/property-income- manual/pim2106). (3) Basically, you need to tell HMRC about your gross rental income, your allowable expenses, and the resultant net rental income – on which you pay income tax. (4) You can submit it yourself online. (5) An accountant may charge you a few hundred pounds, depending on the complexity of your particular case
