UK Landlord Forum / Life

Hello all, I have joined this morning and after a quick bit of advice please. I became a landlord last year after moving from my house to my partners and renting mine out (no mortgage on this property) sadly my mother passed away and I have also rented out her property as well again no mortgage. This is my only income as I finished work last year to do some travelling around Europe. Now we are approaching the end of the tax year I know all my expenses that are deductable etc inc the £208 for a home office, visits at 45p per mile, agents fees, repairs etc. My question is that my total profit for the 2 properties comes out at just over the £10600 tax allowance. If I send in a self assessment form which just scrapes over will the tax man look very closely at me and then I would have to employ an accountant to make sure it's all correct, I think it is but I'm no accountant so it would need to be checked by a professional.

The tax man technically shouldn't consider one way or another however the likelihood of him pursuing you and getting to recover an additional £50 means it's probably not a worthwhile exercise.

My advice is submit and save the expense (if you are confident)
In the highly unlikely event the tax man comes knocking then either field the questions yourself or get the accountant to do so.
With two houses it's unlikely to be so complicated (assuming of course you don't have any other income as you have noted below)

Best of luck

Hi, thanks for that, no I have no other income as such, some savings but that pays hardly any interest at all and is taxed before I get it anyway (ISA etc). I have had some expense this year with the houses such as a new fitted oven as the original broke and a new carpet as the dishwasher leaked and badly marked the flooring in the kitchen, all tax deductable with receipts etc. As its my first full year as a landlord and with registering for self assessment I would like to make sure it's all correct. Thanks I will submit later in the year prob July time and see what they say, if they are being funny then I will employ an accountant to go over it all correctly.

Broad tip is to submit at the time most people submit (closer to deadlines)

Maybe I am paranoid or hopeful but I figure with the deluge of submissions at that time there is less chance of my tax return being picked out whereas to send it in early has a higher chance (as the inspectors have less to do/ to look at)

I have no basis at all for the above other than paranoia. 

Definitely submit. I think the OP was possibly asking if they should bother as they'd identified, themselves, there would be little or no tax to pay.

If so that doesn't matter. Submit. It's easy anyway. You won't need an Accountant.

HMRC definitely prefers people who submit to those that don't. HMRC prefers to chase those rather than people who've submitted and have given a credible return. HMRC prefers to chase Landlords paying no tax over those paying some tax.

I claim £104 for the home office to keep it under the radar. I read. a BIM on that. The Carl Bayley book which referenced BIM 47815 and said - "The new instructions also suggest that small claims not exceeding £2 per week, or £104 per year, will be acceptable for even the most minimal amounts of business use."

I then read BIM 47825, which says - "Angela writes up her trade records at home. She uses a room solely for trade use for a short period each week. She estimates that £104 covers the cost of the proportion of the establishment costs, plus the electricity for heating and lighting. Although the claim for £104 is obviously an estimate of £2 per week, the claim is small and reflects the facts of the case. It is a reasonable estimate of the expense incurred. No enquiries are necessary."

I'm no tax expert but that seemed sensible to me.

Quote from: Hippogriff on March 06, 2016, 06:16:59 AM
Definitely submit. I think the OP was possibly asking if they should bother as they'd identified, themselves, there would be little or no tax to pay.

If so that doesn't matter. Submit. It's easy anyway. You won't need an Accountant.

HMRC definitely prefers people who submit to those that don't. HMRC prefers to chase those rather than people who've submitted and have given a credible return. HMRC prefers to chase Landlords paying no tax over those paying some tax.

I claim £104 for the home office to keep it under the radar. I read. a BIM on that. The Carl Bayley book which referenced BIM 47815 and said - "The new instructions also suggest that small claims not exceeding £2 per week, or £104 per year, will be acceptable for even the most minimal amounts of business use."

I then read BIM 47825, which says - "Angela writes up her trade records at home. She uses a room solely for trade use for a short period each week. She estimates that £104 covers the cost of the proportion of the establishment costs, plus the electricity for heating and lighting. Although the claim for £104 is obviously an estimate of £2 per week, the claim is small and reflects the facts of the case. It is a reasonable estimate of the expense incurred. No enquiries are necessary."

I'm no tax expert but that seemed sensible to me.

I think for my purposes £104 is fair and this is what I have claim for, based on example #1 in
http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm

Reading a few guidelines it does say £208 regarding a home office, but glad for advice

Quote from: Lesstatt on March 06, 2016, 09:19:25 AM
Reading a few guidelines it does say £208 regarding a home office, but glad for advice

Can you post a link to the guidelines you are using.  I am always eager to learn more.
As I understand it the link posted below, is guidance for tax officials reviewing returns.  So I kind of assumed it was definitive.
Corrections, most welcome.

http://www.property118.com/claiming-home-as-office-expenses-for-landlords/29305/

Many landlords run a property business from a home office but are scared to claim business expenses because they are worried about triggering a capital gains tax bill when they move house.

The myth is claiming tax relief for working from home makes part of the property business premises which is liable to capital gains tax when sold.

The reality is HM Revenue & Customs are more than happy to let landlords claim home as office expenses, provided the rules are followed.

Any landlord can claim an annual tax allowance of £208 – or £4 a week – without any questions asked and with no fear of capital gains tax.

Or here

http://www.landlordzone.co.uk/news/home-as-office-claim-can-save-up-to-83-tax-a-year

Most landlords miss out two vital costs when claiming property business expenses to reduce the amount of income tax they pay. Few property people can claw back big amounts of tax, it's more about keeping an eye on costs as every £1 claimed cuts the tax bill pro rata. That's why two expense upgrades that start on April 6, 2012, will help a landlord pay less income tax. The first is home as office costs. Tax inspectors like to argue against a claim on the grounds that the taxpayer should not set off personal bills against a business. However, hidden in HM revenue & Customs internal guidance to tax inspectors is a cast-iron claim for home as office costs which cannot be challenged. The Business Income Manual is online – section 47805 [Opens in new window] explains the home as office claim, which has increased to £208 a year from £150 a year for previous tax years. The manual says tax inspectors can accept a reasonable expense without detailed inquiry. That means without asking any questions or calling for receipts.

Read more at: http://www.landlordzone.co.uk/news/home-as-office-claim-can-save-up-to-83-tax-a-year
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I don't do anything dodgy with tax... but I just prefer to stay under the radar with HMRC. I don't want anything to trigger. So I remain happy to claim the £104. I do not begrudge anyone else who might claim £208... or even real - non-estimated - costs. I'm a steady-eddie type at heart.