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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi I've been renting my house out since dec 2012 @£900 a mth

Resolved Question:

Hi
I've been renting my house out since dec 2012 @£900 a mth which after management fees equals £765 a month however I have had to spend £3000 on a new cEntral heating system& the interest on my mortgage is £248 a mth. Can you tell me how much I need to put aside to pay the tax as this now puts my earnings over£42000 a year for the tax year 2013-2014 & 2014-2015
Thanks
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

Take a look here for information on the types of expenses you can claim against your rental income.

Assuming you are replacing one central heating system with another, you should be able to claim the costs against the rental income as opposed to adding them to the cost of the property as a capital improvement which would reduce any capital gains you may make on a future disposal of the property.

If your rental income in 2013/14 was £10,800 and you paid £1,620 in managing agent's charges, £3,000 for the new heating system and £2,976 in mortgage interest, you will have made a profit for the year of £3,204. Tax on that at 40% will be £1,281.60.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 years ago.
Hi
Thank you for your reply I've calculated fro your figure that as I received my first rental income Dec 2012 & will receive my last end of feb 2015 that my tax bill will be £4176.80.
Do I tell the IR now that I've been renting my house our or request a tax return in April 2015
Cheers
Expert:  TonyTax replied 3 years ago.
You asked for the 2013/14 tax figure which is what I calculated. The tax for each tax year needs to be calculated separately.

You can either register for self-assessment by completing a paper SA1 or by completing the online form here. You should have registered within six months of the end of the tax year in which the rental income first arose and you could have to pay a financial tax based penalty.

You may be able to use the HMRC Let Property Campaign which you can find out about here. If you qualify you can limit the penalty you have to pay by using this amnesty to disclose your rental income.
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