[Paul_HDLover]

From March 2006 i rented out my house (When I bought another one). Since that date, I have paid no tax on the income I have received. Silly me I know.

Anyway, I would like to get this all up to date and wondered if anyone know the best way to go about doing this.

Forunately I do have records of income received vs expenditure and understand the tax is also payable on the element of my mortgage that repays the capital, with the added complexity that I changed the terms half way through and its now interest only.

In any one month the maximum income I have received is ~£100, so that multiplied by 36 = £3600 divided by my tax rate which assuming the highest rate of 40% brings my tax liability down to £1440 with further deductions for repairs, wear and tear etc so to me it looks like < £1000 due.

Any ideas what I should do.

Any advice appreciated.

[nheather]

Contact hmrc (new name for inland revenue), tell them what has happened and request a tax return. Fill it in and return it.

Cheers,

Nigel

[unique]

Originally Posted by nheather

Contact hmrc (new name for inland revenue), tell them what has happened and request a tax return. Fill it in and return it.

Cheers,

Nigel

yup. you won't be the first or last to do this, so just phone them up, come clean, tell the truth and ask them what you need to do. if you don't understand, just tell them and ask for clearer info. they are used to dealing with both experienced and completely inexperienced people. you will usually get along better if you come clean and ask for help

[Phil57]

..Pray!!

[Iccz]

leg it!

[nheather]

Work out what you think you owe, buy that much in euroes and put it aside.

By the time you have to pay you'll only have to hand over half your stash

Cheers,

Nigel

[eric pisch]

just submit accounts for each of the years missed

you will eventually get a statement with a couple of £100 fines for each year owed, a one of interest penalty and then a daily interest rate (normally pence) until the amount is paid.

if you owe them alot they will let you pay it of in instalments.

[matr69]

Originally Posted by Paul_HDLover

From March 2006 i rented out my house (When I bought another one). Since that date, I have paid no tax on the income I have received. Silly me I know.

Anyway, I would like to get this all up to date and wondered if anyone know the best way to go about doing this.

Forunately I do have records of income received vs expenditure and understand the tax is also payable on the element of my mortgage that repays the capital, with the added complexity that I changed the terms half way through and its now interest only.

In any one month the maximum income I have received is ~£100, so that multiplied by 36 = £3600 divided by my tax rate which assuming the highest rate of 40% brings my tax liability down to £1440 with further deductions for repairs, wear and tear etc so to me it looks like < £1000 due.

Any ideas what I should do.

Any advice appreciated.

Yes I have helped several people through this scenario, the biggest mistake you can make is coming clean as a first action, because they will start hammering at you immediatley and that becomes vicious.

Basically work out as you seem to have done an estimation of what you think you owe and have that set aside so that you can meet any demands and then inform the inland revenue of your situation.

Doing it in a way that they feel they are advising you, play dumb in other words, as in you don't udnerstand how it works. The person will then feel like they are helping you and thus no need to attack you (unless you get a grumpy sod).

You will get fined £100 plus interest for each financial year, so you need to have that reckoned in. They will also likely charge you interest on the unpaid amounts for the time it was owed too. However if you do it all in one lump they may only fine you once, but be prepared for the 3 seperate fines etc as a worst case scenario.

Your repayment amount on your mortgage is irrelevant, you simply claim the interest aspect of the mortgage as an expense.

[Paul_HDLover]

Originally Posted by matr69

Your repayment amount on your mortgage is irrelevant, you simply claim the interest aspect of the mortgage as an expense.

Thanks a lot guys. Re above matr69, can you give me an example? Does this mean that the £330 out of the £525 total payment wipes each other out in that although I have paid £195 capital, i have incurred an expense of £330, hence no payment required, or is it based on some kind of factor?

[matr69]

Originally Posted by Paul_HDLover

Thanks a lot guys. Re above matr69, can you give me an example? Does this mean that the £330 out of the £525 total payment wipes each other out in that although I have paid £195 capital, i have incurred an expense of £330, hence no payment required, or is it based on some kind of factor?

if you charge £5000 rent for a year, and the interest aspect of your mortage for the year is say £3000, then you pay tax on the £2000 profit less any other incurred expenses which relate directly to that rental.(the repayment aspect of the mortgage is not allowable for tax purposes)

[Paul_HDLover]

Thanks for help to date guys.... I now have all my figures worked out for 2006-2007 & 2007-2008 and am ready 2 submit to HMRC with cheques etc.

Im going to give them a buzz tomorrow to get hold of a unique tax reference number.

One final question, in terms of allowable expenses i.e. maintenance repairs...how do you lodge them on a tax return i.e. do you have to submit receipts or give the name of the company on the tax return?

[eric pisch]

Originally Posted by Paul_HDLover

Thanks for help to date guys.... I now have all my figures worked out for 2006-2007 & 2007-2008 and am ready 2 submit to HMRC with cheques etc.

Im going to give them a buzz tomorrow to get hold of a unique tax reference number.

One final question, in terms of allowable expenses i.e. maintenance repairs...how do you lodge them on a tax return i.e. do you have to submit receipts or give the name of the company on the tax return?

i assume they will want invoices, never known them to take my word as to what i have spent, which is a shame "yes those 10 monitors are for my personal use"

[Kieron]

You may be better off getting an accountant (their charges can be claimed too as an expense) in this situation.

For what they can save you it's worth a few hundred quid a year.

[Hi-Def]

Originally Posted by Kieron

You may be better off getting an accountant (their charges can be claimed too as an expense) in this situation.

For what they can save you it's worth a few hundred quid a year.

in this situation thats probably the best advice rather than a forum where everyone wants to chip in with advice

you don't want to really mess around and get any numbers wrong with what is allowable and what is not as it may have and effect on the interest you pay and/or any fines. HMRC can either be nice a pie and let you off with the £100 fine or very mean

[wiz]

Send him to gaol. Country needs every penny it can get!

[RichardK]

Originally Posted by Paul_HDLover

Thanks for help to date guys.... I now have all my figures worked out for 2006-2007 & 2007-2008 and am ready 2 submit to HMRC with cheques etc.

Im going to give them a buzz tomorrow to get hold of a unique tax reference number.

One final question, in terms of allowable expenses i.e. maintenance repairs...how do you lodge them on a tax return i.e. do you have to submit receipts or give the name of the company on the tax return?

You only need to put totals on the tax return. But you'll need to keep all the receipts and full details of how the figures are made up for the required number of tax years incase they decide to investigate you.