Unpaid tax on a rental property - help please!

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Unpaid tax on a rental property - help please!

    Hi all

    In brief, I need to sort out unpaid tax on a rental property. This came to light more recently when I started thinking about getting another one and reading up this, properly!

    I’ll try and keep to the basics but is quite involved.

    Property purchased in 1999 for 50k, not ‘that far’ off market value but did need a lot of work. For various reasons I didn’t do anything with it for 10 years until the council threatened forced purchase.

    In 2009 I borrowed an additional 20K for a full renovation, electrics, heating, kitchen, bathroom, damp proofing, basically the whole placed stripped and redone to make it lettable. I am either sure, or delusional, but seem to remember reading at the time that you didn’t need to pay tax on rental income until you started making £ from it and obviously getting on for 20k was a big spend and stayed in my mind.

    I luckily keep most things and for the first two years it rented at £895.00 pcm with a mortgage payment of £645.00, using the tax scout calculator it says nothing was actually due at that time?! It then changed to the same rent and £473.00 mortgage payment. Over time and better interest rates it is now £1075.00 with a £178.00 mortgage payment.

    This is one of those situations where ‘I really must read up on that properly, just in case’ and life gets in the way of life :/

    I noticed there is a let property campaign on the tax website which I guess is who I need to contact?

    I am unsure of things such as how far they go back? fines? do I get in trouble? how it works with tax amounts changing through the years? and now reading about changes next month it seems even more complicated, but I do want to sort this out properly!

    Any advice on the best way to do this is much appreciated.

    Many thanks!

    #2
    Your best bet is to go and talk it through with a local accountant.
    There's usually someone with 5 or 6 staff over some shops along the high street - you may need to look around a bit.
    It's bread and butter to them, and they'll know how to get the issue dealt with properly.

    There's the HMRC campaign and you should be relatively OK, but you'll have to pay the tax that you owe and may pay some surcharges and penalties.
    But HMRC is lenient if you go all in to pay what owe and cooperate fully.

    And, yes, for the record, you were delusional.
    If for no other reason than the renovation probably isn't allowed against income for tax purposes.
    If you were paying income tax during that entire period, you would have been liable for tax on the income from the start.
    It's called income tax, because it's a tax on income.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Ok thank you.

      I guess find an accoount with good reviews. I'll do it asap, thanks, I feel a lot better now, little conerning when you read about big fines and prison!

      Comment

      Latest Activity

      Collapse

      • Rent aroom property relief.
        by calista
        Hi Qick Q i cant find the answer online..

        Can i claim rent a room relief on a rent of 300pounds a month at my first property where I live. 3600 a year.

        I rent a second property 1200 pcm, where I do not live and would not claim the rent a room relief- or rather i pay tax normally...
        31-03-2020, 12:10 PM
      • Reply to Rent aroom property relief.
        by calista
        Thanks for your reply, this is what i thought, but couldn't find anything on the government page to back it up.
        01-04-2020, 21:13 PM
      • S24 deduction of interest payment / Covid-19 Virus
        by Flashback1966
        I am wondering if S24 tax changes are going to come and haunt landlords.

        Under the tax changes landlords can't deduct interest payments in full. Individual Landlords have been paying more tax, then is fair.

        You could end up with a situation where the tenant wont or can't...
        01-04-2020, 08:06 AM
      • Reply to S24 deduction of interest payment / Covid-19 Virus
        by jpkeates
        I don't think that many landlords will pay any more tax, it'll catch some, but I'd have thought for the majority of landlords it's tax neutral.
        A small number of landlords will pay slightly more tax isn't much of a headline, though.

        At the time as s24 has been introduced, the personal...
        01-04-2020, 13:13 PM
      • Selling part share
        by Bill31
        5 years ago i gifted part of my property to my son as joint tenants. We lived in the property together. So its possibly a grob.

        Now we want to go our separate ways. Could he buy my share out so he owns the whole house. And i use the money to buy elsewhere. Could this introduce a IHT or...
        31-03-2020, 13:41 PM
      • Reply to Selling part share
        by Bill31
        Im sure the reservation relies on the person who made the gift.
        If we was to sell the property and take our 50/50 share of the sale price would that release the gift with reservation if we then went on to buy our own property
        01-04-2020, 12:27 PM
      • Reply to Selling part share
        by jpkeates
        The reservation will depend (as far as I can see) on who pays the running costs of the property.
        If the running costs are split in line with the ownership, it's one thing, if the property is run as though it was the mother's house with her continuing to pay all the bills is another.
        01-04-2020, 09:58 AM
      • Reply to Selling part share
        by AndrewDod
        Well if CGT was not payable on the first slice it won't be on the second.

        I don't see that you retained a benefit, but I can't find any case law to that effect. But if rent was payable it would have gone in both directions (you would have paid your son half the rent and he would have paid...
        31-03-2020, 18:19 PM
      • Reply to Selling part share
        by Bill31
        Interesting that it may not be a grob as we own it all together. But surely hmrc will view it as i retained a benefit.

        Its our only main property i dnt think any cgt will be due. I was asking will cgt be due if i make another gift or sell my share to get my name of deeds?
        I ask because...
        31-03-2020, 17:35 PM
      • Reply to Selling part share
        by AndrewDod
        Although they were BOTH living there and both owned it -- so the share gifted is probably not a GROB. It would be if only the OP was living there (owning only a portion) and not paying rent.

        It depends on the proportion - if the OP owned 1% and paid no rent - I think it would be in GROB...
        31-03-2020, 17:09 PM
      Working...
      X