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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi - i have been renting out my flat for 7 years now (i lived

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Hi - i have been renting out my flat for 7 years now (i lived with my partner in his house for the first 4 years and then we bought a home together 3 years ago.) I rent the flat for £500 a month and make a profit of £200. My partner told me i didnt need to pay tax on it as you are allowed to make £6000 per year tax free, but i have just found out that this is wrong and i should have been paying tax the whole time. Im horrified, and dont know how to go about resolving this. Do I just contact the tax and explain? Will i get penalty fines etc? Do I need to go and see a specialist? Do i tell the tax from now im renting the house, or will they check back. Feeling very stupid that i didnt look at this more closely at the time!
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

To be honest, you should register for self assessment and file a tax return to show rental income. If you are only making £200 profit a month then tax payable on the annual profit is not high. You don't have to see a specialist if your affairs are fairly straightforward.

You can register for self assessment here
http://www.hmrc.gov.uk/sa/register.htm

There will be fixed penalty fines for late filing of tax returns and maybe penalty for non disclosure of income for tax purposes. These are clearly explained here
http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#3

Changes to fixed penalty were introduced in tax year 2010-11 and periods covered up to tax year 2009-10 are covered here.
http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm517010.htm

You will be clear with the tax man and no worries. These people have a way of finding out and then the consequences for non declaration are painful.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

hi thanks for your quick reply. so should i just call them and explain the situation as i dont see how i can put the back dated stuff on this years tax return? cheers


 

Expert:  taxadvisor.uk replied 3 years ago.

Vic, thank you for your reply.

You cannot put income from property for prior years in this year's tax return. You will have to send amended tax returns for previous years.

The link here tells you what to do to correct a mistake on your tax return.
http://www.hmrc.gov.uk/sa/correct-repay.htm#2

 

 

You say the renatl income from flat is £500pm and profit is £200pm. Bear in mind, mortgage interest onll is an allowable expense against rental income and you should not include any capital repayment as this element is not deductible.

 

More information on who needs to file a tax return is covered here

http://www.hmrc.gov.uk/sa/need-tax-return.htm


I hope this helps

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