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Hello, I’m James McBrearty, I’d like to talk to you about rental income.

Now, HMRC have recently announced that they are going to be focusing on rental income and actually looking to get more tax through that. And there’s a few misconceptions about rental income and what people think needs to be reported. Fairly often I meet people who haven’t done anything  with reporting their rental income. Because they’ve thought, “Oh, it’s just covering it’s cost, it’s not making any money. I don’t need to report that”,

Unfortunately you do actually have to report to HRMC on what your income and the expenses are for the rental property. But what you might find is you can actually be missing out on a certain actual benefits.

A lot of people think, that it might be just covering it’s cost, not making any money. But when you actually speak to a professional and you realize all the costs that are actually allowable for rental accounts purposes. You could find that you might be missing things. Or you could find that what you thought was just covering its cost is actually making a loss each year if you’re preparing those accounts. As well as meeting your tax requirements for submitting those. You also have the benefit of losses going forward that you can use against future profits. Or more importantly, having the right financial figures, could actually enable you make a decision.

You might have a property that’s not going to be making much money but you might have an option to sell that and it’s having that information enables you to decide whether selling or keeping going is the right thing to do.

Another thing to consider is when you sell the property. Some people don’t realize that there could actually be some tax payable on the sell of the property. When you come to sell it, you’ve got your proceeds you receive and then we’ve also got the purchase cost, and any additional costs that have actually been incurred as due to the purchase.

So if you’ve actually got a profit at the end of that, then it could be due some tax to be paid on it. You might find that after your annual tax allowance you’ve actually got some chargeable income that has to have tax paid.

So with HMRC focusing on rental income it’s important to consider whether there’s anything you might need to bring up to date and declare to HMRC.

If you need some assistance with that, please do contact me. I’ve had people that have let things slide for a couple of years, because they didn’t think they needed to report them and I can help people get up to date and make sure that they are actually reporting things rightly to HMRC. So that they can avoid any nasty surprises.