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Renting Property hmrc
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09-23-2012, 01:16 AM | #1 |
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Renting Property hmrc
I was asked yesterday and I dont know the honest answer ,
If some body is renting there Main Home out and living in Australia there Mortgage is £200 pcm and the rent is £800 pcm the letting firm is 10% plus vat so around £100 they are overpaying there mortgage buy £500 pcm. Would they need to declare they are making the extra £500 or just pay it off the mortgage and say nothing , it is there only home in the uk it isnt like they have multiple properties. I would assume the £500 is considered profit and un taxed income ? so it should be declared. Could they be found out and how , I guess the land registry know who owns it and the electoral role who lives there ,but who would know what the mortgage payments were ? TIA Last edited by scooba0010; 09-24-2012 at 12:34 AM.. |
09-23-2012, 02:22 AM | #3 |
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Thought so !
Sorry quick question , if they dont declare what is the chance of getting caught ? My thoughts are slim to none , They are over paying the motgage with the £500 pcm or £6k pa tax would be 25% ? so £1500 or £125 per month . |
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09-23-2012, 04:04 AM | #4 |
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I would reckon the chances of being found out are slim. Normally this can come to light when a house is sold but if they move back to UK and start to live again in the house then if they later sell it they will be selling their home and no one will probably know it was rented.
Depends a bit on whether the tenant declares it anywhere. Also does this person have to fill in a self assessment return, if he does and fails to declare rental income then it's an offence. |
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09-23-2012, 08:50 AM | #5 |
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HMRC require you to declare it. There is a requirement to fill in a self-assessment form as the others have said.
I'm guessing that HMRC probably would not find out if they did not declare the income, but that is their choice. |
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09-23-2012, 02:04 PM | #7 |
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Your friend has probably had a mortgage for a while and may br on an interest rate of around 2.5%. If they tell the lender they are renting it out the lender may make them switch to a new BTL mortgage at about 5%.
Bad memory is hard to fix; if they forget about HMRC they might forget about informing the lender too. |
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09-23-2012, 02:44 PM | #8 |
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Paul
The profit that's made is (IFAIK) just treated like regular income, so it would be subject to standard taxable rates depending on which tax bracket you fall into. I'm unsure how this would be affected by that person living in (and I assume earning a taxable wage) in another country. While there's a good chance they might not get caught by HMRC, if they do catch up, there could be a substantial backdated tax bill to pay. I'd seek professional advice!
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09-23-2012, 02:48 PM | #9 |
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Professional advice isn't needed I reckon, its pretty clear they need to declare, whether they decide not to declare is up to them and no-one can tell them they won't get caught. Earning in another country won't make a difference, they owe UK HMRC as earnings are within the UK.
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09-23-2012, 04:27 PM | #10 | |
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HMRC, will see that (MP) and ignore everything else on the form and issue your friend with a tax rebate,and set up a yearly direct credit
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09-23-2012, 05:20 PM | #11 |
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Another thing to consider is that when a tenant pays a deposit on the rental, it is kept in a government scheme. I'm guessing this is also a way for the government to determine which houses are rented and if the owner is declaring profit.
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