New Landlord

[WINNYBACH]

I am a teacher and have a property which was empty and uninhabitable for many years. I had some renovations done with the intention of either moving back there myself or selling eventually. I did not intend to rent it out. However my niece and her family had to vacate their flat because they bought a dog and so I let them move in several months ago. It was only supposed to be a temp move but it has become longer term so I have become an accidental landlord. They have been paying me rent which totals about £4k before allowable deductions and I certainly intend to pay tax on this but I don't know how to go about it. Can I just register and do an online assessment? If so do I use the tax code that is on my teacher salary slips? Any advice would be appreciated as I really am useless with tax etc.

[snorkerz]

I am a teacher and have a property which was empty and uninhabitable for many years. I had some renovations done with the intention of either moving back there myself or selling eventually. I did not intend to rent it out. However my niece and her family had to vacate their flat because they bought a dog and so I let them move in several months ago. It was only supposed to be a temp move but it has become longer term so I have become an accidental landlord. They have been paying me rent which totals about £4k before allowable deductions and I certainly intend to pay tax on this but I don't know how to go about it. Can I just register and do an online assessment? If so do I use the tax code that is on my teacher salary slips? Any advice would be appreciated as I really am useless with tax etc.

I wish I could clarify this for you - but I use an accountant.

However, I have posted because I think there may be some laws you might not know about.

Did you take any sort of deposit off your niece? If so, you need to lodge that with a scheme like the DPS - it's the law.

Are there any gas appliances? You need an annual gas safety check + certificate.

Have you told your mortgage lender that your renting?

[tom09]

I would recommend using an accountant. It shouldn't cost you more then a couple of hundred pounds and a good accountant can usually help you to save at least this much. Tax is a complicated subject and if you wanted to do it yourself you would have to spend hours reading up on all the relevant legislation and would probably still not save as much as you could. Legislation and forms change regularly so it's not just a case of getting familiar with the subject once, but continuously keeping up to date.

If you emply an accountant, as other landlords or friends for a recommendation. Make sure you write down all income and expenses and recored the date, payee, expense description and amount. Get all your other paperwork together so you have a neat package to give to the accountant. This will make their job a lot easier and save you money on their fees.

[Chestnut]

I am not an expert but I have done a self-assessment for tax for many years. You need to make sure that you have the sheets for Rented Property Income as well as the usual employment sections. The whole self-assessment form can be downloaded or you could do it on-line (I don't).

You enter your job information using data supplied on your annual P60 form and any other details like bank and building society interest (gross/net/tax), share dividends etc. in the relevant places.

It helps to also obtain or download the notes that apply to the form, both of which which may change a bit each year. I make a spreadsheet record of what I need to fill in with box number references to speed up the process for the following year (beware box numbers sometimes change).

For the last few years the HMRC have elected to send me a Short Tax Return, which covers all the necessary headings on about half number of pages and simplifies the process for both me and them presumably.

It's worth a try - it takes me about 1/2 a day including for my wife who half owns the property (we split income and costs).

Otherwise ask an accountant but either way you will need to keep all your records carefully.

[Melboy]

Your first step is to contact HMRC and register. They are very good at helping you out and will not bite your head off for registering a bit late in the day.

Next step is to talk to an accountant for advice OR elect to do your own tax.

It is essential to get a proper contract in force and as mentioned if you have gas in the property you must by law have a gas certificate or face a heavy fine if caught without one.

Plenty of advice available to you on this website if you want to ask away.

Mel.

[WINNYBACH]

Thanks all for your help - it's more complicated being a landlord than I thought.... I only wanted to help them out until a council house became available!

This has been a very casual arrangement because it's my niece and the only records I have are a spreadsheet I've done of the rent she paid which has sometimes been in cash and sometimes by direct payment into the bank. Am I right in thinking that the self assessments that have to be completed by the end of Jan (online) are only for incomes up to April '09? I don't have a mortgage on the property and my only outgoings have been for buildings insurance. I have made sure I had a safety certificate for the gas boiler - due for another service/check soon. I'll ring my local tax office and see what they say at least then they can't say I'm trying to dodge paying tax.

Thanks again

[Chestnut]

Yes, (I'm reading the notes). 31st January 2010 is deadline for online returns for 6th Apr '08 up to 5th Apr '09 to avoid £100 penalty. (Last 31st Oct '09 for paper returns for that period.)

Your outgoings can include all maintenance expenses on the property for that period including its annual gas check and service, etc. You should ensure you have kept receipts.

There may be a separate box for insurance expense on the full Tax Return sheet - it's a while since I've done one.

Your local HMRC office will advise you. Good luck!

[WINNYBACH]

Thanks Chestnut at least that will only be a small amount to pay tax on. I've done any house and garden maintenace myself and not interested in claiming for any of that. I just want to keep it simple and make sure I pay tax on any extra income. Can't get through to tax office at mo, but I'm sure they'll sort me out. Best wishes