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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4723
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Tax calculation required for April 2012/13 tax year.I need

Customer Question

Tax calculation required for April 2012/13 tax year.I need calculation within2 hours.I am an employee in Uk on PAYE with earnings of 24000 gross.I have a buy to let property with total rental income of £5400,less expenses of e.g letting agents,ground rent,insurances and property interest leaving £1315 less 10% net rent for wear and tear.The 2nd property income is from lodgers in my main residence who pay £490 per month plus £150 towards council tax,water rates.Should I claim rent a room relief or normal property income.My mortgage interest payment is about £310 per month and building insurance £10 per month and homeserve insurance £28 per month.Pease calculate tax liablity.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

I will revert to you with calculations shortly.

Many thanks
Customer: replied 2 years ago.

Thank you I really need the calculations as quickly as possible as I have a deadline today.I should add that there was a adjusted loss figure of £2400 from Previous Tax Year to carry over but I want to know 2012/13 actual tax liability

Expert:  taxadvisor.uk replied 2 years ago.
James, thank you for your reply.

I will revert within the next 30 mins.

many thanks
Expert:  taxadvisor.uk replied 2 years ago.
James, thank you for your patience.

Tax calculations based on information provided are:

Earnings from employment 24,000
Income from property
Buy to let property - profit 775
Losses from previous year 775
Taxable profit 0
Losses carried forward 1,625

Profit (1,315-540 10% w&t)

Rent a room scheme
Rent received - £490pm 5,880
Contribution towards bills 150
Total rental income 6,030
Exemption limit 4,250
Taxable profit 1,780
Total taxable income
Employment 24,000
Income from property 1,780
Total income received 25,780
Personal allowance 8,105
Total income on which tax due 17,675
Tax payable at 20% 3,535.00
Less tax paid - employment per P60

I have opted for paying tax on net income after rent a room scheme exemption of £4,250 as it produces lower profit chargeable to tax.

You have not provide details of tax deducted as shown on your P60. Please take that figure into account when working out net tax payable.

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.

Customer: replied 2 years ago.

Thank for your answer,Please note I do not need to know what tax I need to pay on my P60 earnings from employment as it taken from my wages what I need is how much tax liability on the two property incomes for the tax year 2012/13.Please ignore the adjusted loss from last year I really want to know the cost of the tax from the rent payable from the £490 plus £150 towards costs.Please note my mortgage interest went up to about £450 per month this year .Does this make a difference to whether to use rent or room relief.Also,does HMRC count the £150 towards council tax water rates as taxable income .Thank you


 

Expert:  taxadvisor.uk replied 2 years ago.

James, thank you for your reply...

Please clarify for me - is £150 towards cost a months figure of is it an annual figure as in your initial question you stated "The 2nd property income is from lodgers in my main residence who pay £490 per month plus £150 towards council tax,water rates."

 

How much do you pay for Council tax as it is not mentioned.
Any contribution toward the expenses is deemed rental income..

Many thanks

Customer: replied 2 years ago.

The £150 figure is per calender month.The council tax yearly bill is £1040.The water rate yearly bill is £500.The buidings and contents insurance £120 per year and homeserve insurance for central heating cover About £300 per year .Thank you.Again it is the tax liability for my lodgers rental income £490 plus £150 (£640 each calender month) I need to know .Thank you

Expert:  taxadvisor.uk replied 2 years ago.

James, here is a comparison
Based on figures provided, you are better off not claiming rent a room scheme exemption.

Rent a room scheme

exemption

no exemption

Rent received - £490pm

5,880

5,880

Contribution towards bills

1,800

1,800

Total rental income

7,680

7,680

Exemption limit

4,250

5,680

Taxable profit

3,430

2,000

Tax payable at 20%

686.00

400.00

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.

Customer: replied 2 years ago.

one last clarification are these figures based on £320 property interest per month and in future tax years when I remortgaged to about 450 property interest per month what difference will that make.

Expert:  taxadvisor.uk replied 2 years ago.
James if the mortage interest was £450 pm then the figures would be

Rent a room scheme exemption no exemption
Rent received - £490pm 5,880 5,880
Contribution towards bills 1,800 1,800
Total rental income 7,680 7,680
Exemption limit 4,250 7,360
Taxable profit 3,430 320
Tax payable at 20% 686.00 64.00


I hope this is helpful.
Customer: replied 2 years ago.
THANK YOU YOU HAVE HELPED A GREATLY.Please could you show me how the property interest affects the tax calculation as thinking about it I'm not sure exactly how much is interest and how much is capital and finally one more thing if I earn 23000 and get 11 or 12000 in gross rental income it will not move me up to the 40 per cent tax bracket will it.
Customer: replied 2 years ago.
Sorry I have just received my p60 figures for tax year12/13.My total p60 earnings were 23249.40 and tax deducted was 3028 pounds if possible could you work out extra tax I need to pay assuming I go for normal property taxation not rent a room relief.Thank you
Expert:  taxadvisor.uk replied 2 years ago.

James, thank you for your reply.

Earnings from employment23,250
Income from property
Buy to let property - profit775
Losses from previous year775
Taxable profit0
Losses carried forward1,625
Rent a room schemeno exemption
Rent received - £490pm5,880
Contribution towards bills1,800
Total rental income7,680
Exemption limit5,680
Taxable profit2,000
Tax payable at 20%400.00
Total taxable income
Employment23,250
Income from property2,000
Total income received25,250
Personal allowance8,105
Total income on which tax due17,145
Tax payable at 20%3,429.00
Less tax paid - employment3,028.00
Net tax payable401.00

 

[q]

Please could you show me how the property interest affects the tax calculation as thinking about it I'm not sure exactly how much is interest and how much is capital and finally one more thing if I earn 23000 and get 11 or 12000 in gross rental income it will not move me up to the 40 per cent tax bracket will it.

 

[a]

I showed you a comparison in my previous table .. the expenses under "no exemption" include interest payments where as the amount under "exemption" is standard exemption limit.

 

It is taxable income after personal allowances that determines whether you are likely to pay tax at higher rate or not. It is not the gross rental income but profit from property income that is treated as income for tax purposes.

 


I hope thai is helpful and answers your question.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

Expert:  taxadvisor.uk replied 2 years ago.

Hello James

I notice you have viewed my response to your further questions on taxation of property income (JACUSTOMER-sj0y9u31- Last Viewed on 31/01/2014 at 22:13).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.

If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

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