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TonyTax
TonyTax, Tax Consultant
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My niece has received approx £45,000 in rental income

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Hi,
My niece has received approx £45,000 in rental income over the past 5 years from a property owned by her since March 2010.
She has not declared the income to HMRC but now wishes to do so. She is a standard rate PAYE taxpayer on £28,000 per annum.
What would the tax liability be.
Kind regards,
Grant
Hi. Is the figure of £45,000 net of deductible expenses? Is it spread evenly over 5 years? Which tax years are you referring to exactly?
Customer: replied 2 years ago.

Hi Tony,

No the amount is a gross figure. Expenses need to be deducted but I understand they are not a large amount.

It is evenly spread over the 5 years, received monthly, and started in March 2010.

Grant

Thanks. At £9,000 per tax year, the income tax charge will be £1,800 for each tax year (20%). HMRC will charge interest at 3% per annum from when the tax was due for each year and they may also charge tax related penalties which could be as high as 100% of the tax charge. However, if your niece makes a voluntary unprompted disclosure, then the penalty should be lower. Take a look here for information on penalties and here for information on deductible expenses. Your niece may also use the let property campaign to make a disclosure which could result in a much lower penalty than otherwise might be charged. Read about the LPC here. I hope this helps but let me know if you have any further questions.
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Customer: replied 2 years ago.

Thank you. Great advice.

Grant

The tax rates for the tax years concerned can be found here. The personal allowance rates can be found here. Even if your niece's salary was £28,000 in 2009/10, she should pay tax at 40% on any of the rental income.
Thanks for accepting my answer.
Re-type: Even if your niece's salary was £28,000 in 2009/10, she should NOT pay tax at 40% on any of the rental income.