How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3125
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I am based in the UK and am a British citizen. I am

Customer Question

Hi
I am based in the UK and am a British citizen. I am trying to work out whether I can afford to let my flat in the UK and move with my partner into rented accommodation to be closer to work. I am trying to calculate my take home income, after tax, of my salary and any rental income I receive. This is so that I can deduct mortgage payments and costs to work out if I can afford to pay rent. I know it should be simple income v expenses exercise but every time I try to calculate it I come up with a different figure and need a clear formula I can use (or someone else to do the calculation for me) to feel assured before I sign any tenancy agreement.
I also want to know whether I can afford to use a letting agent or not.
If someone could help, I will provide detailed figures.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
It is all so simple as the Mercat in the TV advert said! If you rent out your flat in the UK then the interest element only of any mortgage payments can be deducted from the rental received to reduce the taxable amount due to be added to your existing salary to derive an income tax estimate. The following items may also be deducted (source, Which):
'The most common types of expenses you can deduct are:
Water rates, council tax, gas and electricity
Maintenance and repairs to the property (but not improvements)
Contents insurance
Interest on a mortgage to buy the property
Costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
Letting agents' fees
Legal fees for lets of a year or less, or for renewing a lease of less than 50 years
Accountant’s fees
Rents, ground rents and service charges
Direct costs such as phone calls, stationery and advertising for new tenants
The expense should be incurred wholly and exclusively as a result of renting out your property.'
Once you have the net figure, add it to your existing salary to derive a total which will be subject to UK Income Tax.
When you eventually sell you will be liable to Capital Gains Tax (CGT) on the proportion of the gain made on disposal. This effectively means that CGT will only be charged for the let period of ownership (less the last 18 months when you are deemed to be in occupation even if this is not the case) and you would be entitled to Lettings Relief of up to 40K instead of your Annual Exempt Amount (currently 11.1K).
Whether to employ a lettings agent to act on your behalf is frankly up to you, it does relieve you of responsibilities, but it does cost.
I do hope that I have been able to shed some light on your position. Time for the wet towel round the head and the backs of several envelopes for you to work it out!
Customer: replied 1 year ago.

Hi Keith

Thank you.

I have been adding the entire rental income (£17680) to my salary income (£52500) and calculating the tax. What you are saying is that I should only add the difference between my income and my expenses which is £9450 without letting agent fees and £12210 with letting agent fees.

So I add £9450/£12210 to £52500 and calculate my tax from there?

I know it is simple but I find numbers difficult.

Sam

Expert:  bigduckontax replied 1 year ago.
Sam, you have it to a T.
Don't forget to take off your personal allowance of 10K last year, 10.6K this tax year. You will have a tax liability on approximately 52K of income on your figures (not using a letting agent).
Please accept my apologies for the short delay, I am diabetic and was having lunch. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3125
Experience: FCCA FCMA CGMA ACIS
bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions