Tax query

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    Tax query

    we have not declare rental income for 14 years, capital repayment, we are in the 40% tax bracket. joint mortgage on one property
    we did not know we had to pay anything since the mortgage payment and the rent were about the same. We now want to declare after an accountant said we are liable, our fear is the huge interest penalties etc, losing sleep over this really worry and its affecting my health. Please will appreciate any advise, thank you.

    #2
    Tax is due on PROFIT not income.

    If mortgage interest plus other expenses are greater than the rent, there is no tax to pay.

    Comment


      #3
      Contact a good landlord accountant urgently.

      Hope you have all receipts, records & filed all documents.

      Be grateful HMRC are overworked with a backlog of landlords. But expect fines and penalties - .. Why do people think they can get away with this & other things?

      Anything else forgotten - permission to let, gas safety certificate, landlord insurance, safe electrics?
      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        theartfullodger,

        No need for the sarcasm

        King_Maker,

        Thanks for the prompt reply

        Comment


          #5
          The tax you pay as a landlord is income tax, and is a tax on your income.
          There are expenses that you can offset, but not all of them, and so the tax is not (strictly speaking) on "profit".

          And to offset them, you have to complete a tax calculation and submit it to HMRC.

          However, as King_Maker says, if you don't actually owe much or any tax, the penalties are likely to be minimal, as they're calculated in part on the tax owed.

          I'm amazed that the mortgage payment and the rent were the same for 14 years, what was the point of the investment?
          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


            #6
            Did I read something about a tax 'amnesty' for landlords who hadn't declared rental income. Something along the lines of, making a declaration before a date and all will be forgiven - apart from tax owed (i.e. no fines).

            I might have dreamt it - but then again, I might not! The Government certainly did this with undeclared overseas income, as I accidently got caught up in this one.


            Edit: Just found this

            http://www.theguardian.com/money/201...ngs-income-tax

            Comment


              #7
              Yes, HMRC are conducting enquiries into landlords who have been avoiding Income Tax & Capital Gains Tax (and VAT and Class 2/4 NI for FHLs).

              Voluntary disclosure will mitigate any penalties due :

              https://www.gov.uk/let-property-campaign

              Comment


                #8
                Originally posted by kitoro View Post
                theartfullodger,

                No need for the sarcasm...
                Eh? What sarcasm??
                I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                Comment


                  #9
                  Its better to sort this matter out via an accountant to stop the endless worry and loss of sleep. .

                  As in post #2 , you need to calculate the rental profit for EACH tax year to estimate what taxes is owed over the past 14 years. You can set off mortgage interest ( but excluding the capital repayment part) against the rental income . If the property is held under joint names, then each person will have to submit a tax return and report their half share of the annual rent and maintenance expenses. if you have painted the exterior woodwwork every 5 years , then probably for those years there may be no tax to pay.

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