Tax Question

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    Tax Question

    Hi,

    I purchased my first buy to let property in January 2006 of this year, and was able to rent it out immediately.

    Comming towards the end of the year I thought I best contact an accountant to have any taxes I owed cleared. The accountant has informed me, that I should have notified the tax people as soon as I had let my house out, and also cleared my tax before the end of April 2006 for the last tax year.

    I have another meeting planned with my accountant later on this week.
    Can someone please inform me whether my accountant is giving me the correct information, as I thought I had to have the tax cleared before the end of Jan 2007 for this year gone.

    Currently I am using an estate agent to let the property out, for which I have taken out a Buy To Let mortgage. Nearly all of the rental income I recieve goes off to pay for my mortgage, with only about £80 per month left after paying all the fees. Can some one also tell me whether I would have to pay any tax on this.

    Cheers

    #2
    Tax Advice

    You return for the period you stated does not have to be with the taxman until 30 Jan 07, this is when your tax will also be due, you should have however informed the tax office when you started to let the property out.

    You will have to pay tax on any profits out of the rent which have not been offset against your mortgage interest or any oher costs which are allowable for tax relief

    I hope this answers your questions if you need to change your accountant i can offer you a competative rate with sound advice

    Regards
    Pollard & Co Accounting Services

    Comment


      #3
      Hi,

      can you please inform me of your contact details.

      Cheers

      Comment


        #4
        Section 7 of the Taxes Management Act 1970 says that you should have informed HM Revenue & Customs by 5 October 2006 that you have commenced renting the property. This is the case with most new sources of untaxed income.

        If you have not notified them they can impose a penalty, but in practice they will not as long as you file your tax return by 31 January 2007 and pay your tax liability by the same date.

        Depending on the level of tax due and your other circumstances, you may also have to make a payment on account of the 2006/07 tax year, one by 31 January 2007 and one by 31 July 2007, which will each be 50% of the liability for 2005/06.

        I can help you with the return if you wish. I would recommend you seek advice from a Chartered Tax Advisor. I have 17 years experience in Tax and have specialised in the buy to let market for the last six years.

        Feel free to contact me - the first discussion/meeting (if within a reasonable distance) is free.

        Comment


          #5
          Originally posted by yas1 View Post
          Hi,

          I purchased my first buy to let property in January 2006 of this year, and was able to rent it out immediately.

          Comming towards the end of the year I thought I best contact an accountant to have any taxes I owed cleared. The accountant has informed me, that I should have notified the tax people as soon as I had let my house out, and also cleared my tax before the end of April 2006 for the last tax year.

          I have another meeting planned with my accountant later on this week.
          Can someone please inform me whether my accountant is giving me the correct information, as I thought I had to have the tax cleared before the end of Jan 2007 for this year gone.

          Currently I am using an estate agent to let the property out, for which I have taken out a Buy To Let mortgage. Nearly all of the rental income I recieve goes off to pay for my mortgage, with only about £80 per month left after paying all the fees. Can some one also tell me whether I would have to pay any tax on this.

          Cheers
          Others have already answered your earlier questions.

          Regarding the final paragraph, you need to be aware that only mortgage interest can be claimed as an expense and not any capital repayments included therein. It is best to obtain the interest figure from the mortgage statement for the relevant period or even better to simply obtain a certificate of interest paid from your lender.

          There are a lot of other possible expenses you could claim. For example, buildings insurance, furnishings wear and tear allowance if it is let furnished, estate agents fees, gas and electricity safety certificate fees and any maintenance contracts, repairs to the property and contents etc.

          Hope this helps.

          Ramnik
          Private advice is available for a fee by sending a private message.

          Comment


            #6
            is there an idiot's guide to what you can claim? As my first self assessment is due and although my rental income was only £5280 this year, i really would like to claim the max!

            Thank you!

            Comment


              #7
              Originally posted by ivrytwr3 View Post
              is there an idiot's guide to what you can claim? As my first self assessment is due and although my rental income was only £5280 this year, i really would like to claim the max!

              Thank you!
              You could look at HMR&C's manual PIM2015 - Schedule A: deductions: general rules: main types of expense and the link for this is:

              http://www.hmrc.gov.uk/manuals/pimmanual/PIM2015.htm

              Ramnik
              Private advice is available for a fee by sending a private message.

              Comment

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