OnTax Accountants In Dunfermline advise that each person owning a share of the rental property should complete a tax return. Husbands and wives owning property jointly would both fill in a tax return but need not fill in a partnership tax return. We would be happy to advise further on this.
If the amount you charge for rent a room (including all laundry, meals, goods and services) is less than £4250 per year then there is no tax to pay.This means though that any loss incurred is not tax allowable either.
Accounts should be prepared to 31st March. We would point out thought that paper tax returns should be submitted by 31st October and electronic tax returns by 31 Jan.Beware! Here at OnTax we have all too often seen clients failing to supply their info to us by 31 Jan and being fined heavily. Make sure you meet the deadlines!
We would like to highlight that if your rent a room receipts are greater than £4250 per year then you should prepare accounts and you will be taxed on the income less expenses.Essentially just slipping over the £4250 threshold can land you a sizeable tax bill on the whole sum! However, you can elect to be taxed on the difference between £4250 and the gross receipts, but, no allowance is available for expenses.
Any tax due must be paid by the 31 Jan deadline. Get your accounts into us on time and we will calculate your tax bill for you. If you let a room in your house (your main residence or at least an overlapping period when the tenant and you stayed there) purely for residential accommodation then you may be eligible for rent a room relief. Consult us for more info. If you already have a lodger or are thinking about letting furnished rooms in your home, you can receive (In the 11/12 tax year) up to £4,250 a year tax-free (£2,125 if letting jointly). This is known as the Rent a Room scheme.
If the property is jointly owned then each person is entitled to half the relief. If more than 2 individuals own a property then guidance would suggest that each individual is entitled to £2,125 allowance each.
Tax Doesn't Have To Be Taxing!...Yeah Right!
Do I Need An Accountant?
The answer is no! That is, if you understand how to claim all your taxable relief's, the 10% wear and tear allowance, the capital allowances (relating to fixtures such as electric installations, gas installations etc along with working out your basis period for tax along with perhaps a claim for "sideways relief" and a myriad of other issues! So in short yes you do need a Dunfermline Accountant to help you!
Tax can be very confusing, even to Accountants. That's why it pays to get an Accountant to help you with property tax returns as the chances are we know most of the answers. And the ones we don't? Well, that's our headache, you enjoy doing what makes you money and leave the headache to us.
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