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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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i am a sole trader non VAT registered, i have bought a commercial

Resolved Question:

i am a sole trader non VAT registered, i have bought a commercial premises for my personal buisness use recently ( mainly because it was a bargain rather than ideal for my use ). I have been offered a rental income from the property. The rental income added to my existing income from my sole trader buisness would take me past the VAT threshold.
My question is: Would the rental income be considered towards my buisness turnover ? or could it be seperated to prevent my turnover exeeding the limit for VAT registration ? ( my sole trader buisness is selling sofas )
Thanks
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.
Rental income from property would not be treated as business income for the purposes of VAT unless you have opted to tax land and buildings.
More information can be found on HMRC Notice 742 here... see Para 4.3 and 4.5
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000154&propertyType=document
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 3 years ago.

thanks for your answer !

what is opting to tax land and buildings ?

Expert:  taxadvisor.uk replied 3 years ago.
Steve, thank you for your reply.
An interest in land and buildings is exempt from VAT. Opting to tax means that you can claim VAT on all expenditure pertaining to that building and charge VAT on any income arising from letting the premises.
I hope this is helpful.
Customer: replied 3 years ago.

Thanks, ***** ***** now.

Would i have to register the rental income as another buisness and separate the incomes in different bank accounts etc ?

Expert:  taxadvisor.uk replied 3 years ago.
Steve, thanks for your reply.
You don't have to register this income in a separate bank account. Separate it from other turnover and show this income as property income when filing your tax return.
I hope this is helpful.
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes.

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