Don’t forget to tell HMRC you have investment property
I’m new here and am after some advice regarding my tax liability with my rental property. I bought a rental property two years ago and refurbished it. It has been rented out pretty much ever since. I bought it mostly because it was close to home and I wasn’t sure whether I’d have the enthusiasm for the project!
The good news is that I loved it and would do it again in a shot! The trouble is, that I did the property up, rented it out and forgot about it!
I didn’t really think about whether I should register for self assessment or what steps I should take.
I was vaguely told by someone that I could earn up to £8000 pa from it without being liable for tax as I am in full time employment, but I’m confused and not really sure what I should do!
I make roughly £200 pcm after the mortgage is paid and the agent’s fees come out.
Any advice would be greatly appreciated!
Tom
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Member Since February 2011 - Comments: 3453 - Articles: 286
9:34 AM, 6th November 2014, About 11 years ago
Hi Tom,
I have posted this question rather than answer directly, because it is still very frequently asked even by Landlords who have had property for much longer.
Yes you do need to inform HMRC and also self assess. The good news is that it was only 2 years ago and many Landlords have left it much later without realising.
Regardless of whether there is any tax to pay you still need to declare it.
If you need a great accountant this is the only one we are able recommend please see >> https://www.property118.com/member/?id=452
Member Since June 2014 - Comments: 2
10:19 AM, 6th November 2014, About 11 years ago
Reply to the comment left by “Neil Patterson” at “06/11/2014 – 09:34“:
Thanks very much for that Neil, I’d better get on the case!
Member Since January 2011 - Comments: 12195 - Articles: 1396
11:38 AM, 6th November 2014, About 11 years ago
Reply to the comment left by “Tom Wheeler” at “06/11/2014 – 10:19“:
Hi Tom
The advice you have been given by your friend is wrong I’m afraid.
However, a good accountant should save you more than they charge you. Here’s a link to the member profile of the accountant who advises me >>> https://www.property118.com/member/?id=452
We ran a very similar discussion article a few weeks ago, reading the thread will probably answer a lot of questions and make you feel a lot better – see >>> https://www.property118.com/just-realised-ive-messing-tax-return-years/69650/
.
Member Since July 2013 - Comments: 305
12:22 PM, 6th November 2014, About 11 years ago
When you say you forgot all about it, presumably you have covered things like inventories, insurance, tenancy deposit, gas safety certificates, inspections etc?
Member Since September 2013 - Comments: 217
12:31 PM, 6th November 2014, About 11 years ago
Tom,
HMRC have a catchall: Any untaxed income received from a new source must be reported. You are lucky in that it is a short time. If your income arose in the 2013-14 tax year for the first time you will be even more lucky though I think you missed the deadline for informing. (I am not a tax expert). Get a good tax accountant. You or him inform HMRC ASAP. Draw up your accounts and file. In due course you may event just get the simple short return for reporting income.
Member Since July 2013 - Comments: 1434
12:44 PM, 6th November 2014, About 11 years ago
There is an amount below which you do not need to register for self-assessment BUT you still need to notify HMRC by phone.
I believe the amounts are
1. Less that £10,000 gross income.
2. Less than £2,500 profit.
I do not know the situation if you make a loss in the first year (i.e do you just phone HMRC or do you need to register for Self Assessment).
Member Since January 2011 - Comments: 12195 - Articles: 1396
4:34 PM, 6th November 2014, About 11 years ago
Reply to the comment left by “Michael Barnes” at “06/11/2014 – 12:44“:
Hi Michael
What is the source of your information please?
.
Member Since July 2013 - Comments: 1434
8:32 PM, 6th November 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “06/11/2014 – 16:34“:
I posted from memory.
This link states it, but I did not believe it.
https://www.gov.uk/renting-out-a-property/paying-tax gives £2500 figure. I am unsure if that is gross or net income.
Member Since June 2014 - Comments: 2
9:01 PM, 6th November 2014, About 11 years ago
Reply to the comment left by “Adrian Jones” at “06/11/2014 – 12:22“:
Sorry, I didn’t make it very clear, I have done everything else properly! The property is rented out by an agent who deals with deposits and inventory, gas safety cert done by a gas engineer friend.
The only reason I started thinking about all of this is I’m considering selling the property as I could probably get more properties with the amount I have invested and use it more wisely. I remember my solicitor saying the profit from the property may be liable for capital gains tax, that in turn made me start thinking about tax in general!
I applied for self assesment this morning so hopefully I will hear back soon.
Member Since July 2013 - Comments: 1264 - Articles: 1
12:30 PM, 7th November 2014, About 11 years ago
If you have a tax loss it’s worth reporting it as it can be carried forward against future income