Declaring Letting Income and General Question

[JB8989]

Hi all,

My wife and I started letting our property last year (August) and have not yet declared our letting income. My understanding is that you declare to HMRC between the start of the following tax year (April 2015) and the next October. Is this correct?

My second question is that should we claim together or do it separately? We are both higher rate tax payers and at some point will want to sell, in which case I would have thought doing it together would make more sense, to get twice the CGT relief. How do you claim together (apologies for the naive question, I've never dealt with HMRC, have always been PAYE).

We are renting our present property and only own the one other, that we are letting out. Does the fact that we pay more in rent now than we get from letting have any implications for our tax returns?

Thanks in advance

[Ian McTernan CTA]

You state 'our property' so I'll assume it's jointly owned.

You need to notify HMRC of your chargeability to tax and register for self assessment. You don't get jointly assessed, so you would both have to register and declare 50% of the income and expenses. You will then have to complete Tax Returns declaring the income and your PAYE income.

The rent you pay has no effect on the rental income.

As you jointly own the property CGT will be calculated on that basis, although you would each have to submit your own CGT calculation when the time comes.

[JB8989]

Thanks for your reply. So I assume my info on us declaring between now and October is correct. Thanks, that's helpful

[King_Maker]

It is the Net Profit on which Income Tax is payable. There is no need to claim any Loss, it will be automatically carried forward against future profit(s).

I assume that neither of you are within Self Assessment at the moment?

If not, then depending on the income/profit levels, it may be possible to advise HMRC via a letter and have the tax deducted via PAYE.

[JB8989]

Thanks king_maker, that's interesting. No, we're not registered , we've just applied (response speed from HMRC is appalling isn't it, I've never had so much trouble trying to give someone money )

After deducting estate agents fees and expenses it's only a hundred quid or so profit a month, but we'll probably do it by self assessment. Thanks for the info though, if I get a chance to speak to someone I may ask that option.