Rental property tax
Discussion
If you earn just under the 40% bracket and then get a £10k income from a property that you rent does that then push you into the 40% bracket?
The guides I have read online only talk about the tax you pay if you are currently "in" the 20% or 40% or 45% - not if the income pushes you into those brackets.
Sorry if its a really stupid question!
The guides I have read online only talk about the tax you pay if you are currently "in" the 20% or 40% or 45% - not if the income pushes you into those brackets.
Sorry if its a really stupid question!
What amount of your income ends up in the higher income tax bands is (generally) arrived at by adding together all your taxable income from all sources.
If you are currently a basic rate taxpayer, the rental profit MAY move you into the higher brackets.
As has been said, people are taxed on the PROFITS from their rental activities. However, the tax rules are changing and in a year or so's time, even those who make losses on their rents may find that they will be taxed on a "notional" profit. This is because they will not be getting full tax relief on the finance charges they have incurred on the property during the year.
If you are currently a basic rate taxpayer, the rental profit MAY move you into the higher brackets.
As has been said, people are taxed on the PROFITS from their rental activities. However, the tax rules are changing and in a year or so's time, even those who make losses on their rents may find that they will be taxed on a "notional" profit. This is because they will not be getting full tax relief on the finance charges they have incurred on the property during the year.
red_slr said:
Sorry if its a really stupid question!
There are no stupid questions. For the avoidance of doubt,
- Yes, additional income from property may push you into the 40% tax band, but
- It's not like Stamp Duty - you still pay 20% tax up to a taxable income of about £32,000 (total income about £42,000) and 40% rate on the excess above that. However,
- You can make pension contributions/investments to cut you taxable income back to the £32,000 level. You can get full 40% tax relief on such pension contributions. Or, as we like to say, free money from the government....
Ozzie Osmond said:
You can get full 40% tax relief on such pension contributions.
Not for much longer. In a year or so it will be flat rate: http://citywire.co.uk/new-model-adviser/news/govt-...Behemoth said:
Ozzie Osmond said:
You can get full 40% tax relief on such pension contributions.
Not for much longer. In a year or so it will be flat rate: http://citywire.co.uk/new-model-adviser/news/govt-...Gassing Station | Finance | Top of Page | What's New | My Stuff