First time buy to let.
Discussion
Hi guys, I am currently moving out of my flat into a rented property closer to work. I have lived in my current flat for 7 years and do not want to sell it really. I have arranged with agents to let it out. I have a buy to let mortgage being arranged for me. The only thing I'm not really sure on is the tax. I know I can deduct the interest on the btl mortgage, along with the ground rent, service charge, agents fees and insurance from the profit and pay tax just on the remainder. But how do I do this. Can I do it online, can I do it monthly and is it just 20% of the profit?
Any advise would be gratefully received as this is all new to me.
Any advise would be gratefully received as this is all new to me.
Edited by Hamster69 on Thursday 1st May 22:02
Short answer(typing on phone) is :
You need to register for self assessment. You will be issued a utr to complete a tax return.
You're understanding is largely correct, it is 20% if you are a basic rate tax payer.
The tax will be due yearly by 31st of January, or if below 3k can be collected through your paye income if you have it.
You need to register for self assessment. You will be issued a utr to complete a tax return.
You're understanding is largely correct, it is 20% if you are a basic rate tax payer.
The tax will be due yearly by 31st of January, or if below 3k can be collected through your paye income if you have it.
It is well worth paying an accountant to work through this.
When we first did this we found out that we can claim a significant part of the income as tax deductible simply because we include white goods. It is therefore let "part furnished" and there is a simplified tax structure that allows us to use that to offset tax. It means we can't claim the actual replacement cost of appliances but having done this over several years we seem to be coming out ahead even with Bosche and Miele kit going in.
There are other subtleties that the accountant has worked out and it is well worth the £150 or so it costs for him to do the return every year.
When we first did this we found out that we can claim a significant part of the income as tax deductible simply because we include white goods. It is therefore let "part furnished" and there is a simplified tax structure that allows us to use that to offset tax. It means we can't claim the actual replacement cost of appliances but having done this over several years we seem to be coming out ahead even with Bosche and Miele kit going in.
There are other subtleties that the accountant has worked out and it is well worth the £150 or so it costs for him to do the return every year.
As a procrastinating BTL wannabe, I'd suggest popping over to www.moneysavingexpert.co.uk - find the property rental bits of the forum, and read the horror stories, from land lords who are trying to get rid of problem tenants, and from tenants who are trying to avoid eviction.
I'm not saying DON'T do it, I'm saying understand MORE about your obligations than the Letting Agent, and make sure that the agent does everything by the book.
I'm not saying DON'T do it, I'm saying understand MORE about your obligations than the Letting Agent, and make sure that the agent does everything by the book.
Hamster69 said:
Thanks for the advise guys. The profits will be well under 3k at the moment so how would the paye system work. Has anyone done the return online?
You just complete the self assessment, and HMRC send you a bill (or they can adjust your PAYE code to collect it). Edited by 98elise on Sunday 4th May 15:46
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