UK Landlord Forum / Life

Hi,

I am a new landlord and letting part of my BTL property which I purchased couple of years ago just for the purpose of investment. Both me and my wife are working full time and making enough money to cover mortgages, expenses etc. of two properties we own. We are happy in our jobs and do not want tenants to give us unnecessary stress just for the sake of money. I have 3 bed house on BTL mortgage in north London (next door house) out of which 2 rooms I am renting to 2 singles. one room is being occupied by my relative who has come to UK for study. I am not charging him any rent as he is close relative who helps me a lot in cleaning and general maintenance of the property as and when required. The other two tenants are also known to me and I have not asked them to pay any deposit. There is no formal tenancy agreement. Recently I spent around 6K on repairs of kitchen, bathroom, boiler and two toilets. I called HMRC to register for self-assessment tax but HMRC said I do not need to file any tax return until I start making any profit from BTL property. I just need to keep records of rent, mortgage and expenses in case HMRC ask for it. My questions to forum are:

1. Shall I start filing returns even though I am not making any money?
2. Do I need to declare anything to government with regards to the deposit from tenants?
3. I have gas safety certificate, smoke alarm fitted in the house. do I need to change the doors & furniture to fire resistance ones?
4. if I file the tax return, can I claim all the expenses I incurred in last two years on repairs? Can I also claim the money I spent to install new boiler?
5. before the existing tenants moved in, I kept the property vacant for almost 8 months as we don't want to go crazy by letting it to somebody who does not know the value of it.

Thanks

1.No
2. You said no deposit, so no. If you get a deposit you need to protect it.
3. Only is you have more than 5 people in the house. See rules on HMO's, if its classed as a HMO you do a fire risk assessment which will dictate what you need to install.
4. No, never ever. You can add these to the cost of the property for Capital Gains Tax only.
5. Interest paid on the BTL mortgage would qualify to set against any future gains.

Your problem is this, you are not looking at the rental as a business, you are letting your friends and family occupy the house, without a view to making a profit.

This being the case you are better staying out of the tax system. Any "losses" you make can only be set against future rental profits, so you gain little in the short term by registering, and if you did register, then you would have to treat the "free" rent for tax purposes as a part reduction in the deductions you make to calculate any profit or loss.