New guide to tax on income from property
Do you charge rent to someone else for living in a property that you own? Or do you sub-let a room in your house to a lodger? Having income from property means you need to consider your tax position, tell HM Revenue & Customs about it and possibly pay extra tax if you make a profit. Our new guide aims to help you understand what you need to do.
People do not always realise they have to tell HM Revenue & Customs (HMRC) when they start to receive a new source of taxable income, such as rents from letting out a property. The law obliges you to let HMRC know if you have a new liability to tax, at the latest by 5 October after the tax year in which it first arises.
But just knowing that you need to let HMRC know about the source of income is not enough. If you are renting out a property – even just a room in your own home – you will need to know how to work out:
- what income is taxable
- what deductions you can claim
- what tax relief is available – particularly important being the ‘rent-a-room’ scheme for those with lodgers
- how and when your tax on any profits will be collected.
You also need to watch out for other possible tax issues. This might be capital gains when you sell a property or the complexity which can arise if you allow someone to occupy a property for the longer term (giving them a ‘lease’).
Our new guide to tax on income from property aims to help you get to grips with the main points, and to recognise when you might need to seek additional help.
Contact: Kelly Sizer (please use form at http://www.litrg.org.uk/ContactUs)