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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My niece has received approx £45,000 in rental income

Customer Question

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
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
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 1 year 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

Expert:  TonyTax replied 1 year ago.
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 1 year ago.

Thank you. Great advice.

Grant

Expert:  TonyTax replied 1 year ago.
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.
Expert:  TonyTax replied 1 year ago.
Thanks for accepting my answer.
Expert:  TonyTax replied 1 year ago.
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.