UK Landlord Forum / Life

Hi all. Me and the wife are in the process of buying a new home for us to live in. Selling our existing residence has not been easy so we have decided to re-mortgage with a buy to let and rent the place out. So first time landlords with lots to take in. The btl is going to be a joint mortgage so when it comes to tax return time can we choose who fills it out and therefore who is liable for the income tax.? It wont be a massive amount and as I already have to do a tax return as a self employed private hire (taxi) driver for convenience sake it would probably be easier if I just add the landlord income to my tax return. Do the inland revenue have a say in who fills the tax return and therefore pays the tax ?
Thanks in advance ladies and gents. As I said i'm new to the game so I may well be asking for more advice soon. I did attempt to use the search option for an answer but didn't come up with anything satisfactory.

My understanding is that the 'income' from the house is joint income i.e 50/50 each so has to be declared as such.

Thanks very much to Riptide for reading my post and replying. I appreciate it. Can anyone confirm or refute what Riptide has said ? Thanks in advance.

It doesn't matter as long as all the income is declared.

They would only really query it if you were really trying to avoid megga tax.

I am the same, in that for years I have declared all our joint rental income.

Thanks for taking the time to reply boboff. That's what I was hoping to read.

To be specific the income tax is based on the percentage of ownership.  Usually joint properties are 50-50 by default.  If the property belongs to one party in a greater proportion than the other, you can pay tax in the same proportion once you have filled out, and have had accepted, F17. 

https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

The form is effective from the date that it is agreed and signed off by IMRC, which will not come into force until that tax year is being paid for.

If however the property is unabiguously registered with the land registery as being owned 100% by one party there is no need to fill out the form, that party just pays all the tax.

Thanks Martha.

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm


Ooops, sorry, Martha's right.

I would still try and do what you think is best though, but thats my personal opinion.. It's not right.

Another reason to sell I am affraid!

Jameds...
Sympathy dude for being an accidental landlord.
Please be careful of advice received from websites (including my own) and always do your own research.
Obviously I cannot understand your full situation from a small blog....

All of the posts prior are well meaning but not correct.

I assume you and your wife own the property 50:50??
However you can declare to HMRC that the property income (and costs mind you) are to be attributed in a non 50:50 split...

Go to this website link
https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

HMRC Form 17 permits this legally.
Why do this?
Well if your marginal tax rate is 40% and your wifes only 20% then it would be financially better to declare the income 99% in her name and 1% in yours.  The split is not reflective of the ownership at all - hence its called a Beneficial Interest - which where a previous post is misleading.

Technically you cannot just do this to avoid tax (it says so somewhere on the HMRC website) .  Although you do need to provide it upon submission of the Form 17, there needs to be some "justification" (that you can provide in the highly unlikely scenario Mr. Tax comes knocking on the door).
For example if you have kids and your wife is not working so much to look after the kids then you could claim the investment is made for her income etc etc... your circumstances will determine how 'creative' you can be.

You will need to write up a deed between you and your wife (simple one page document)

Note this does not change the ownership of the property which will remain 50:50.

I must admit I do not know whether such a deed would put you at a disadvantge if you and your wife divorced (you see how much you have to think about at every step??) but I am if indian descent and we never divorce (just live in misery) 

I'm not an accountant but my brother and his wife both are...

All the best.

Interesting stuff from T.A.L. although not as relevant to myself as I thought it was going to be. The house we are about to rent out is actually in my name only. We did plan on changing this with a B.T.L. remortgage and changing the deeds to joint ownership. After second thoughts we have now stayed with our original lenders and received consent to let. We are going to see how that goes and continue reducing the debt on the house with repayments. Therefore it will just be a case of myself paying tax on any profit made from the rent.
(Waits with mild trepidation expecting to be told I've dropped another bollick 😊)

Jameds...
Please be careful of advice received from websites (including my own) and always do your own research.
Obviously I cannot understand your full situation from a small blog....

Well done -- no bollock dropped at all
Given your position on being an accidental landlord (and who knows when you might want to bail out) this is a good tactic to punt things down the road
In the short term  its unlikely splitting the income would be worth the extra lawyer/bank costs/increased mortgage rate
To get consent to let is a great start

Just be careful on the duration they let you do that for....
Some banks want to have a right to withdraw at any time or review every year....just be prepared that's all.

But for now....good move!

Best of luck

Thanks T.A.L.
They did lay down a few stipulations most of which i wasn't concerned about but one seemed to indicate they would only allow 6 or 12 month assured short term tenancy agreements with no right to extend or renew. I queried this on the phone and was told that once the consent was granted they would basically leave it in place for the duration of the mortgage. I asked was this call recorded and the girl said yes so i said good can i pay the £100 admin fee now by card and she said yes and took the money. It was Natwest by the way. Is that good or bad ?

Jameds...
Please be careful of advice received from websites (including my own) and always do your own research.
Obviously I cannot understand your full situation from a small blog....

The requirement for a non extension is something I've seen before.  All they want to do is make sure the tenant doesn't have a reciprocal right to extend in which case they will have difficulty evicting when they take over the property if you default on your mortgage payments.  Absolutely no issue as you should rely on the periodic tenancy/section 21 in any case.

Am gobsmacked she let you have consent to let for the rest of the mortgage period.... Unless you are paying a ridiculous interest rate or at the end of the mortgage then pat yourself on the back and tell your wife you are a GENIUS

Also you did well to confirm the call is recorded but I would suggest the following (not only with the bank but in other dealings as well):
1. Confirm the call is recorded
2. Ask for the name of who you speak to (sometimes they do not give surname but that's ok)
3. Write down the exact time and date of the call
4. Write down the number you dialled
Keep those details because you might need them in 5 years time (or in your case potentially 20 years time)

Sometimes if you are talking to a halfwit ( e.g. A birdbrain from the council) it may be prudent to send (and keep) an email summary of the conversation based on your understanding of what was discussed....even if they don't reply it will help your case later.

The above is all finessing what you have already done, which is brilliant....

Sorry to mention one potential fly in the ointment but I assume you will get Landlord's Building Insurance?
If so make sure to ask whether they need proof (written) of the consent to let
Sometimes this only becomes apparent when you are making a claim (and are super stressed out)
So it may be prudent to get it in writing in any case...hopefully the bank doesn't baulk on the deal when they need to write it down.
Or there are some insurers that explicitly do not need to see the consent to let (you decide which path to follow).
prepare, prepare and.....


Best of luck

Thanks again TAL.
I thought the non extension of the tenancy part would be something like you have stated above because to be forced to turf out a decent tenant after 12 months would obviously be ridiculous and no benefit to any party involved.
I'm not paying a painful rate currently on my mortgage but I doubt I can claim to be a genius either unfortunately. I have about 12 years left on the mortgage and the property until now has been my place of residence. Like most people I have taken advantage of the cheap 2 year fixed rate period and each time the 2 years runs down i've opted to sign up for another 2 years rather than go onto the S.V.R. My current fixed rate period ends in about 5 months and my suspicion is they may automatically move me onto the S.V.R. claiming to move to another fixed rate period would be a new mortgage product and would invalidate my Consent to let. I would then have to weigh up S.V.R. against a B.T.L. I will obviously try my hand at a new fixed rate to test the water at the time asking if I can do this and keep C.T.L. but advice or opinion on this by anyone on this matter would be appreciated.
I did ask the name of the call centre staff and recorded the exact time and date of the call but thanks for the advice on that matter.
I have sorted out a reasonable quote on Landlord insurance which is due to become active this Thursday when I move to my new house with my tenant due to arrive a week later. I will request the consent to let in writing and see if the insurers need to see it. Thanks for taking the time to post It is much appreciated.

Can anyone confirm or refute my suspicion concerning when my current 2 year fixed term on my mortgage ends as mentioned in my last post ? Facts or opinion would be appreciated.

^^^^^^^^^
Anyone ?

Can I offer an opinion on your opinion concerning the future actions of an unknown third party without being privy to all the facts is what you ask??

Anyone >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


Okay I consulted my Crystal Ball...


You will meet a tall dark stranger, frankly rather handsome, and wise, and he will tell you not to ask daft questions on forums, and then "bump" your post to get a reply to a stupid question when you should rather take the silence as an indication at peoples general dismay at the question.

or

Yes they will hammer you for 27% more interest, it happened to me, the bastards.

or

No, it will be fine I am sure, it happened to me, and really you are so small a problem to them, they dont give a shit.


You choose your own destiny, so to speak....

No Boboff I am sure you know I wasn't asking that if you had read the previous posts. You know I was asking specifically about the liklihood of Natwest allowing me to stay on their cheaper fixed rates without it contravening my consent to let. If you feel you have to take the piss when I've asked a sensible question then I struggle to understand your motive. You probably knew what my response would be if you had consulted your crystal ball.

My point stands, I would love to see your sensible question.

Thank you very much for your helpful reply.

NatWest offer BTL products.

You should expect them to require you to move to a BTL product at some time. This is how most financial institutions operate. A Lender like YBS, who does not offer any BTL products, could allow you to remain with CTL indefinitely, but I am not sure whether they would allow a new desirable product to be chosen over the SVR at the end of the period. HSBC, as an another example, will allow someone to have CTL for 1 year... after that you will be asked to move to one of their BTL products... if they are on the ball.

I don't even know if this answers your question... my eyes are going funny.

Yes thanks Hippo that answers my question.its pretty much what I expected. As I said a few posts earlier I thought the Natwest would want me to move to a B.T.L. product rather than extend the fixed rate period although I have been granted consent to let for the length of the mortgage. I realise that some of you may find a newbie somewhat tiresome and I apologise for my lack of knowledge  and I'm sorry my question caused "dismay" as Boboff put it. I am trying to learn on the job. Thanks again. Hope my stupidity isn't the reason for your sore eyes.

Quote from: jameds on September 18, 2015, 12:30:27 PM
Thank you very much for your helpful reply.

You're welcome.

Quote from: jameds on September 18, 2015, 01:15:20 PM...I'm sorry my question caused "dismay" as Boboff put it.

I have found this forum to be a less sensitive place to be than other Landlord forums... less precious... less actively moderated even. I don't see this as a bad thing. Mostly I welcome it. If you feel a little put-out by comments don't sweat it - it's just how we are... we are still using our free time to answer those questions and even if we come down hard on you, it probably means we might think you're being a bit lazy or expecting to be spoon-fed or you are asking for the moon-on-a-stick... but it doesn't mean that we don't like you.

I think you can handle it.

This forum is more like a pub, where your mates are ripping the piss out of you for being a prat (but all the time).

Fair comment. It's probably my round...