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can you help with tax man

podd2000 Avatar
banned8y, 7m agoPosted 8 years, 7 months ago
A few years ago my now wife rented out her home because she was having money problems.She did not realise she had to pay income tax so did not pay it.Now the dreaded tax man has found her and she ows them £3000 but she has asked if there is any way she can pay over time but they would not accept a payment scheme and told her that the next step is court.Is there any way out of this for her.Would like to hear you input.Cheers, paul
podd2000 Avatar
banned8y, 7m agoPosted 8 years, 7 months ago
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#1
sometimes they just take extra off your wages . Go to Citizens advice .
#2
i thought you dont pay income tax on the first house you rent out?
#3
You definitely do NOT pay income tax on your first property. The only circumstance when you pay income tax on a property is when you have a second home in the UK that is rented out. If you were renting at the time or staying with someone else then you are still fine.

If they want to waste their money taking you to court, I'd let them. Citizens advice is the next stop for you as they know who to contact directly for these probs.
#4
Tax Man is a git!! If he wants it he will get it.

Check out the following site, it is a site full of accountants and tax professionals, ask the question there or it might already be answered.

http://www.taxationweb.co.uk/forum/
#5
amansk
i thought you dont pay income tax on the first house you rent out?


I thought this is classed as an income therefore you pay tax. Not sure though
#6
The tax office will ALWAYS accept a payment scheme - if it is sensible. Try offering them "half the rent"; or something like that. If you say you can only afford £5 per week, then they can immediately look you up and see what benefits you're getting. No benefits? Then they'll assume you can afford a higher payment.

Make sure you've claimed for everything under the sun when you prepared a schedule of your rental income (including 10% of rates for wear and tear, iirc); make them a sensible offer, and you're sorted.

Tim
banned#7
Thank-you all for you much needed help
#8
yes..tax payable at 22% unless you earn more then the higher limit around £34k..then tax at 40%
banned#9
As the OP suggests it was the wife's one and only home she owned that she rented out, then you do NOT pay income tax on renting out your main home
#10
Don't really want to confuse the issue even further, but if you take a look at:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017814

then it should be apparent that while there are things like "rent-a room" schemes, and I quote, "If you let your home while you live somewhere else, your profits from the rent are worked out and taxed in the same way as for residential investment lettings."

i.e. - it's taxable.

If the OP's wife had to pay rent then there's a big argument in favour of that being an allowable expense. Worth bearing in mind - but don't forget that the person receiving the rent might find it was taxable.

Bear with me a moment - if the OP's wife paid rent to someone who was renting her a room, then she could claim the rent as an expense, but the renter might not have to pay tax on the income under the rent-a-room scheme........... definitely worth bearing in mind....

Tim
banned#11
Someone mentioned to me (i think it was Shengis) before that you're allowed to earn £400-£500 per month before you have to pay tax any income
#12
What would be the situation if the house is in the trust fund for the kids, and that the house is rented out? Anyone know?
banned#13
nadss;2016137
What would be the situation if the house is in the trust fund for the kids, and that the house is rented out? Anyone know?

I think thats tax free as its exactly what MPs do with their free state subsidised second homes to avoid any taxes on them when they sell for a profit.
#14
nadss;2016137
What would be the situation if the house is in the trust fund for the kids, and that the house is rented out? Anyone know?


Umm. Depends on the type of trust; but HMR&C have been gradually bringing trusts within the tax base. IIRC, the only way of avoiding taxation was to use a discretionary trust, where the settlor and beneficiaries have pretty much no say in what the trustees do; but tax still arose when the assets were distributed, as opposed to when the income arose.

HTH
#15
lumoruk;2016031
Someone mentioned to me (i think it was Shengis) before that you're allowed to earn £400-£500 per month before you have to pay tax any income


That'd be your personal allowance? Everyone can earn £5,225 (tax year 2007/08 - it'll change next year) before paying tax.
banned#16
Timbellina;2018072
That'd be your personal allowance? Everyone can earn £5,225 (tax year 2007/08 - it'll change next year) before paying tax.

next year? It changed on April 5th.

Now £5,435.00 for a single person under 65:-

http://www.hhassociates.co.uk/tax_and_audit_information/tax_information/personal_tax_rates_0809__0708.htm
1 Like #17
csiman;2018188
next year? It changed on April 5th.

Now £5,435.00 for a single person under 65:-

http://www.hhassociates.co.uk/tax_and_audit_information/tax_information/personal_tax_rates_0809__0708.htm


At my age, all those years just blend into one.........
banned#18
Gonna try and get her head out of the sand as she has received a letter today demanding full payment or court..looks like CAB.thanks all for your input very much appreciated.paul
#19
Did you get this sorted?
#20
MANJ_007;2047542
Did you get this sorted?


As MANJ said - did it get sorted? Come on Poddy - when the group helps out, if it did; then give us some feedback. That encourages us to help out other individuals. If you just take the advice and then forget about it, it provides no incentive for anyone to provide advice in the future.

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