So you’ve secured your tenant, renewed your Gas Safety Certificate (I hope!) and organised your alternative accommodation as of 28 July 2012; but have you considered the tax consequences of letting your property out during the 2012 Olympic Games?
For those taxpayers who already complete Self Assessment Tax Returns, it may simply be a case of including the Land and Property pages (SA105) alongside your usual Tax Return disclosures, but if you are an employee who is used to having the correct amount of tax deducted at source from your salary each month, you may need to register to complete a Tax Return for the year ended 5 April 2013 in order to disclose this income. Don’t forget that if you own your property jointly with your spouse who has had no previous requirement to complete a Tax Return (maybe they aren’t working, or are a low income earner?), they may now have a one-off filing obligation.
Those with income in excess of £150,000 will suffer tax at 50% on their rental profit net of allowable expenses (basic and higher rate taxpayers will suffer 20% and 40% respectively) and this tax will become due on 31 January 2014, as will the submission of the 2012/13 Tax Return.
That said, depending on the amount of rental profit received it may be possible to have the tax due deducted from your salary in a future tax year, and if you are only renting out a room in your house as opposed to the whole residence you won’t have tax to pay at all providing the rent falls below £4,250 per annum.
What’s clear is that, regardless of the scenario, Her Majesty's Revenue and Customs (HM Revenue and Customs or HMRC) is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes including the national minimum wage.... are already gathering information from the various Olympic letting websites in order to ensure that all the temporary landlords meet their filing obligations with regard to their property lets.
We can help you deal with the income you receive from your Olympic tenants (or indeed if you have any property income queries) by ensuring you register with HMRC as appropriate, declare your rental income after all allowable deductions available to you and pay any tax that may be due on time. If you would like to arrange a meeting to discuss your circumstances in more detail please contact us.