RENTAL INCOME
by Applegate Accountants, Cheshire

Call us now for Rental Income Assistance Property rental income can include , income from renting out land, renting furnished or unfurnished property. The term property is used to mean buildings, either residential, ie. Flats and houses, or commercial, i.e. offices Running a hotel or guest house would not fall under this category, but would be considered a trade.

Even if you do not make a profit on your lettings you must still declare it on your tax return.

If you let out all or part of a property (including your home), how you’re taxed on the rent depends on the type of letting. If you let property abroad, you may have to pay UK tax on the rental income if resident in the UK for tax.

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The 'Rent a Room' scheme If you are letting furnished accommodation in your own home to a lodger and your total receipts (rent plus income from meals, laundry service, etc) are £4,250 or below (£2,125 if letting jointly), you can get this under the rent a room scheme.

To find out more about the 'Rent a Room' scheme contact Applegate & Co., Frodsham, Cheshire.

Tax on residential lettings Letting residential investment property is treated as running a business - even if you only let out one property. And if you let out more than one property in the UK, they'll all be treated as a single

Rental Income Cheshire Whether you let one or several properties, you're taxed on the overall 'net profit'. You work this out by: adding together all your rental income adding together all your allowable expenses taking the allowable expenses away from the income Working out your net profit like this means that you can offset a loss from one property against the profit from others.

Your net profit counts as part of your overall taxable rental income. Letting all or part of your home If you let your home while you live somewhere else, your profits from the rent are worked out and taxed in the same way as for residential investment lettings. The same rules apply if you let part of your home outside the 'Rent a Room' scheme. If you let part of your home this way, you can include a percentage of household costs like gas and electricity when you work out your allowable expenses.

Tax on UK furnished holiday lettings, The tax rules for furnished holiday lettings in the UK are different from the rules for residential lettings. The rules let you; reduce your profit by claiming ‘capital allowances’ for the cost of furniture and fixtures that you provide inside the property you let offset any losses against your overall income – not just against your rental income Also, when you sell the property you may be able to take advantage of extra relief's that’ll bring down your Capital Gains Tax bill.

Tax on UK furnished holiday lettings, Tax on overseas property lettings
You’ll have to pay tax on income you get from overseas property lettings (whether you bring the money into the UK or not) if you are ‘resident, ordinarily resident and domiciled’ in the UK. If you are ‘resident’ but either ‘not ordinarily resident’ or ‘not domiciled’ in the UK you may only have to pay tax on any money you bring into the UK. For an explanation of these terms and to find out more read our main article.

If you’ve already paid foreign tax on your letting income, you can usually offset this against the UK tax tax you'll have to pay on it. Tax on overseas property lettings, Record keeping for landlords If you let out property, you’ll have to keep records of your income and expenses for at least six years – whatever type of letting it is. HM Revenue & Customs can ask to see supporting information for your figures

Even though you can’t claim expenses when you use the Rent a Room scheme, it may still be worth keeping proper records. You’ll need them if you decide to opt out of the scheme later.

Record keeping for landlords, Declaring and paying tax on your rental income If your taxable rental income from rent is £15,000 or more in a tax year you must declare it on the full Self Assessment tax return. If it’s under £15,000 you may be able to complete a shorter four-page return.

RENTAL INCOME by Applegate Accountants, Cheshire

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RENTAL INCOME
by Applegate Accountants, Cheshire