I have been renting out two properties for a number of years now. In the first few years the interest on my mortgages was so high that I could offset this against the earnings with little tax to pay.
For the past 4 years I have worked abroad, paying no tax on my UK income and therefore having my UK tax allowance free to cover my property earnings. I have recently moved back to the UK and with the interest portion of my mortgage now lower I look set to start having to pay more tax. In light of this I am investigating ways of legitimately offsetting the tax. I currently do all repairs on the properties myself and therefore do not have repair bills just receipts for materials used. Is there anyway to offset more of the costs associated with these repairs? Time, travel expenses, tools, etc?
Also I am now in the upper tax bracket so paying 40% tax on some of my earnings. Will the income from property therefore be taxed at the higher (40%) rate too?
I look forward to your replies.
Thanks in advance – Ian
Mark Alexander’s advice
Forums provide an excellent opportunity to pick up useful tips but please don’t take everything you read on forums to be true. By all means follow up any ideas by consulting HMRC directly but I do strongly recommend getting professional advice and always get your questions answered in writing. Good professional advice is not cheap but I look it it this way – if the professional advice I receive saves me more than it costs then it’s good value, especially as professional advisers will carry professional indemnity insurance which can be claimed upon in the event of receiving poor advice.
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