When do I need to start paying tax :-(

[reph4444]

I bought a property in August 2012 and completed some repair work, which I believe I cannot claim back against my tax (from previous posts) :-(

My tenant started living in the house January/February 2013

Not sure when I need to submit a tax return and period to cover :-(

To be honest, not sure how or what to submit on a tax return :-(

Any help much appreciated, especially with what I can offset against my tax

[Melboy]

You should have registered with HMRC for the tax year ending April 2013 or as soon as you became a landlord receiving untaxed income from rental property.

If you are currently employed on PAYE with HMRC then you will have to submit a separate HMRC form.

EDIT:

Here you are:

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=OSWvtKIMh2c&formId=3187

Whilst we are on the subject of HMRC how is this for Big Brother is watching YOU ! (1984 )

http://www.ft.com/cms/s/0/0f98bbc0-2db6-11e2-9988-00144feabdc0.html#axzz2jOLNrVss

[Richlist]

To be honest, not sure how or what to submit on a tax return

Here's a summary of the sorts of expenses you might be able to offset against taxable profit......all subject to your individual ciircumstances:-

Some of the buying costs

Lettings agents fees

Ground rent

Service charges

Mortgage interest

10% wear & tear allowance

Freeholder permission to let

Utilities during voids

Repairs & maintenance

Other loan interest

Finance costs for mortgage

Car capital allowances// mileage costs

Wages

Postage

Home Telephone/ Mobile telephone

ISP costs

Books & publications

Printer cartridges

Cleaning materials

Stationery

Bank charges

Use of home as an office

Equipment repairs

Car parking

Training courses

Rent guarantee insurance

Inventory costs

Deposit protection costs

Gardening services provided by Landlord

Advertising

Consumables

Computer software

Photocopying

EPC certs

Gas certs

Electrical checks

Capital Allowances

etc etc etc

[Carryon Regardless]

If you aren't already apply for the self assessment and as you complete the forms that should pick up your land and property income.

It can take a while fore the online set up so the sooner the better.

HMRC Demonstrator Introduction to Self Assessment

These are the cut off dates,

HM Revenue & Customs: Tax return deadlines and penalties,

so complete the online assessment by 31st Jan 2014 and that will cover you for the 12 / 13 tax period.

[Chestnut]

If some replies (and/or HMRC info) look intimidating, fear not! - It is quite simple for you, especially if you only have a few properties.

Inform your tax office that you have property income (from Feb 2013) to declare for year ending April 2013, and subsequent years, and take their advice.

You will be asked to fill in 'Property Tax' on Tax Return or, if you currently use a Short Tax Return for Self-Assessment it's currently just two bits of data (rounded to nearest £) into 3 boxes under 'UK Property'. (Explained in HMRC Notes)

(1) Gross income from property (rent from Feb 2013 start to 5th April 2013).

(2) Total of all your expenses (keep records!) for same period - from after first tenant moved in (not anything before).

Some of Richlist's extensive list of possibles may be a bit OTT as many only proportional (e.g. home phone). Significant expenses would be insurance, annual gas check and maintenance if applicable, other routine maintenance. HMRC gives clear guidance.

(3) = (1) minus (2) for net income. (You should manage this calculation!)

There may be penalty to accept for late submission by post as deadline for 2012-2013 was yesterday. There is still on-line alternative to try until end Jan 2014.

If property owned jointly - divide each figure and submit separate return for each partner as above.

Be aware of any tax rule changes for future years.

Good luck!

[bdh198]

If you're thinking of doing you own self-assessment tax return (and for a small portfolio of only a couple of properties there is no reason why you shouldn't), then a valuable guide that's well worth investing in (and the cost of which you can also deduct as an expense) is Carl Bayley's guide:

http://www.taxcafebooks.co.uk/11274/propertytax.html

[Richlist]

Don't forget to keep separate records for

* Future CGT (Capital Gains Tax)

* Capital Expenditure

* Car Mileage

* Car Capital Allowances

[reph4444]

thanks everyone, looks like a lot of valuable info I need to start looking through and also get the ball rolling with

Good news for me (in regards to tax) is that I only have one property (which I hope to leave to my kids rather than the wife when I pop my clogs :-)

I've not looked through the comprehensive list from Richlist as yet, but one in particular jumps out i.e. 10% wear and tear allowance. Can anyone advise what that can be offset against? i.e. kitchen units, bathroom, carpets ??

As an aside, anyone know of any easy ways of transferring the asset to my kids as they are over 18 to reduce the tax % being paid

Thanks again :-)

[Melboy]

As an aside, anyone know of any easy ways of transferring the asset to my kids as they are over 18 to reduce the tax % being paid

No easy way. I have just transfered a property ( and still going through) to my own children under the 7 year gift IHT rules and still drawing breath rule and still top-side rules and it cost £290 through my solicitor to do this.

I did a lot of investigation into this before deciding to cough up the money.

Land registry charges plus associated costs push the price up and I couldn't be bothered with the hassle of doing it myself.

[Chestnut]

10% wear and tear?

Someone will correct me, but I thought this was alternative to offsetting running repair/replacement costs (my choice).

e.g. carpets - you either claim % of original cost every year or cost of replacement in year when done. Not both!

HMRC no doubt has answer - and their rules may have changed since I last read them ......

[Richlist]

10% wear and tear?

Someone will correct me, but I thought this was alternative to offsetting running repair/replacement costs (my choice).

e.g. carpets - you either claim % of original cost every year or cost of replacement in year when done. Not both!

1. As far as I'm aware nobody has suggested you claim 'both'.

2. The 10% wear & tear allowance is for fully furnished property only.

3. There is no alternative.....the tax rules changed this tax year. You can no longer claim any replacement costs for contents other than by using the 10% wear & tear allowance.

4. You claim 10% of the gross rents received.....not a % of the original cost of the carpet/ item.

5. You can still claim the cost of any repairs to contents.

Try to keep up Chestnut.

[Chestnut]

"Try to keep up Chestnut."

Sorry sir! I do try!

But some of you bigger guns give out an awful lot of info for us small guys, which might lead to confusion, particularly over whether relating to 'fully furnished' or not.

Current HMRC Guidance is summarised here https://www.gov.uk/renting-out-a-property/paying-tax last updated 22 Oct 2013. (only two weeks ago!).

[Richlist]

I get very frustrated with landlords sometimes. Many of them complain that their profits are being eroded by legislation and increased costs when, at the same time they fail to claim all their allowable expenses.

I view my tax return as a means of increasing my profits. I make sure I claim every penny I'm entitled to......how many can say they do the same.

My comments are fully in line with HMRC requirements .....so I don't understand the specific point you are trying to make.

If you find claiming the expenses you are entitled to confusing then I suggest you get some help. There are plenty of accountants that you can pay to do a fairly mediocre job for you.