Hope all having nice weekend, but I need help my friend gave her two bedroom flat on a rent and how to submit her annual renting income and what sort of form need to fill in, and annual earning from rent is under £4000 a year and flat they renting is under husband and wife so do they have to pay any TAX ? and they joint income from working is under £25000 a year before Tax and their all Tax get paid direct from their employer.
So please help me how to do and thank you in advance
I'd have to address two things for you in a negative way to help put you on the right track:
The husband and wife are not taxed jointly but separately. If one spouse is earning £20K and the other 5k, it may be possible to allocate all of the flat income to the spouse with the lower income. Depending on their ages, they each have an individual tax free allowance of £10,600 set against the whole of their income after expenses, before they reach any tax liability.
The form you are after is a Self Assessment Tax Return along with Land & Property Supplements. The earnings are declared in each year to 5th April and whether they have to pay any tax on rental income often depends on whether they can deduct any mortgage interest.
I suggest starting by reading the notes and links on the following page. Then, after considering what other expenses they may be able to set of, let us know if you think their income after expenses is more than £2,500.
If the flat is rented furnished you can claim a percentage for wear and tear.... think it is 10% of rental income. Don't forget to add Landlords liability insurance.
just as a side note to that, if the rental includes either water rates or council tax those must be deducted before calculating the 10% allowance.
Also don't forget the option of renting just a room rather than the whole flat. Current rate for rent of room is £4250 which would be exempt from tax.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In my experience so far, I have not come across the room only rental, so thank you for that input.
As regards to water rates and council tax, again what I have come across is that Landlords prefer not to have these included in the rental, preferring to keep these costs separate and for the tenant to sort. However if renting on a room only basis, I can see how including these costs would work.
Thank you Tim and Shaun
for your advice, and its ben rented as a flat and landlords paying an insurance and Landlord paid all council fee for permission so can they claim back and do they have to submit any other paperwork or any receipt alongside
many thanks
Minaxi
With your saying 'working' this indicates to me that they'd need Employment supplements for completion of their Self Assessment tax returns. If your friend is the Landlord then it looks like they will need to register for Self Assessment.
They will claim allowable expenses against the rental income and pay a percentage in taxation on the difference (profit).
From the opening line I read it as renting a 2 bed flat. The rent seems low though at less than £350 a month, so it could well be subletting.
The Government offer a tax free rent a room allowance, so if renting a room out the OP' friend could well be eligible. At the moment you can receive up to £4250 tax free, which goes up to £7500 next April. For couples this is £2125 each.
Hi everyone
