velohead66

Need an estimate of tax due to the tax man in the following scenario.

Me and my misses are renting our uk house out, and get say GBP 1,000 per month. Ignoring any tax deductions like management fees/interest/repairs etc, what is our tax bill. Also assumes no other uk income, and we are both residing in NZ.

I presume we get GBP 6,000 income each, less our personal allowance of GBP 4,615 each makes taxable income of GBP 1,385 each ??

Is this correct ???

Also, less inportant what 'costs' are tax deductable.
And what 'costs' are not.
Presume mortgage interest IS, whilst mortgage repayments (capital) ARE NOT ??

[couldn't add up, derrr]

[Edited by velohead66 - 11/28/2002 5:56:10 AM]

fast bloke

depends on the value of the house. You have an allowance for income from property of 5% of the value. This is considered capital return on the investment instead of earnings on the investment, so it doesn't need to be declared. After that, with a good accountant you can deduct about everything, including some of the cost of running a car so you can collect rent every month, so the short answer would be to get a good accountant. They should be able to save at least their cost in potential tax bills. After the first year you will know what you are doing so you can do it yourself

blair

As you are resident in NZ the situation may be a bit more complicated.

Assuming you split the rental income equally, you will have an income of £6000 p.a. each.

Against this you can set various expenses including mortgage interest (Not capital), management fees, council tax if you pay it, etc.

If you rented the house furnished you can either claim capital allowances on the costs of the furniture or claim a flat 10% of the rental income as a deduction.

There is more info at:

http://www.inlandrevenue.gov.uk/pdfs/ir150.pdf

You may have to have tax deducted from the rents if you use a lettings agent and have the cash remitted directly to NZ - the best way round this is just to keep an account open here and pay the money into that. It also helps to hedge against the ever falling NZ dollar !!

hope this helps

Andy

Forgot to say that once you have deducted the expenses to arrive a the rental profit you do have your uk personal allowance. You will also need to add any interest received in the uk. Remember also that the first slice of income is taxed at 10%

[Edited by blair - 11/27/2002 9:34:56 AM]

velohead66

Good Link.

Pity all these 'agencies' use this pseudo acrobat application that takes 2 hrs to download, and then you can't save the data, you can't cut & paste, etc etc.

Looks like I'll have to print the 200 pages at work.

Thanks for the link though.

So on the face of it, the tax bill may be zero or near zero.
Thats based on either 5% of value, or with pers allowance of 4615.

thanks, guys

[Edited by velohead66 - 11/28/2002 6:00:32 AM]