Tax evasion....
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Tax evasion....
No not another dig at MPs, more a question about avoiding the avoiding of tax!
Hopefully someone can answer this question - posted away from home so place rented out and into MQs, in general I understand that tax has to be payed on rental income less expenses incurred in the renting of property ie on the profit. So my question is, does the rent I have to pay on my MQ to have somewhere to live cause MOD have sent me away from my home which cant be sold in the current climate, be included in the same category as interest on mortgage, insurance, repairs, legal fees etc??
Hopefully many of you have been in a similar position and someone may know the answer. I'm thinking it should be fine as the MQ costs more than the net 'profit' each month and I don't have a choice....
Thanks in advance for any good tips!
Hopefully someone can answer this question - posted away from home so place rented out and into MQs, in general I understand that tax has to be payed on rental income less expenses incurred in the renting of property ie on the profit. So my question is, does the rent I have to pay on my MQ to have somewhere to live cause MOD have sent me away from my home which cant be sold in the current climate, be included in the same category as interest on mortgage, insurance, repairs, legal fees etc??
Hopefully many of you have been in a similar position and someone may know the answer. I'm thinking it should be fine as the MQ costs more than the net 'profit' each month and I don't have a choice....
Thanks in advance for any good tips!
Inland Revenue - Property Income Manual
Try looking through this
There is a lot of information (too much for me to go hunting through), but my gut feeling is that the answer will be 'no'.
There is a lot of information (too much for me to go hunting through), but my gut feeling is that the answer will be 'no'.
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This is what a Millionaire is doing to ease his tax burden......
"Tony Blair has a commercial consultancy, called Tony Blair Associates, plus jobs advising a US bank and a Swiss insurer. He has a multimillion pound book deal. He also has a charity, the Tony Blair Africa Governance Initiative, and another called the Tony Blair Faith Foundation. But much of the income, which includes charitable donations from other sources, has been funnelled through a structure called Windrush Ventures No 3 Limited Partnership....
Blair has a complex web of structures involving 12 different legal entities handling the unprecedented millions he is receiving since he stepped down from office in 2007.
So mystifying are the former prime minister's financial structures – which involve highly specialised limited partnerships and parallel companies – that the Guardian today launches an open invitation to tax specialists and accountants to attempt to explain the motivation behind such structures. We have published the Companies House documents and other legal papers regarding the structure of the partnerships at guardian.co.uk and invite expert comment via our site at guardian.co.uk/politics/series/blair-mystery.
There is no suggestion Blair is doing anything illegal. But he refuses to explain the purpose of the secretive partnerships."
I ask myself a simple question about our ex PM's Tax scheme - Why? When everyone else is being fleeced rotten! The answer must be - because he can and he is a Champagne Socialist. Married to a Human Rights Lawyer dedicated to help the disadvantaged!
"Tony Blair has a commercial consultancy, called Tony Blair Associates, plus jobs advising a US bank and a Swiss insurer. He has a multimillion pound book deal. He also has a charity, the Tony Blair Africa Governance Initiative, and another called the Tony Blair Faith Foundation. But much of the income, which includes charitable donations from other sources, has been funnelled through a structure called Windrush Ventures No 3 Limited Partnership....
Blair has a complex web of structures involving 12 different legal entities handling the unprecedented millions he is receiving since he stepped down from office in 2007.
So mystifying are the former prime minister's financial structures – which involve highly specialised limited partnerships and parallel companies – that the Guardian today launches an open invitation to tax specialists and accountants to attempt to explain the motivation behind such structures. We have published the Companies House documents and other legal papers regarding the structure of the partnerships at guardian.co.uk and invite expert comment via our site at guardian.co.uk/politics/series/blair-mystery.
There is no suggestion Blair is doing anything illegal. But he refuses to explain the purpose of the secretive partnerships."
I ask myself a simple question about our ex PM's Tax scheme - Why? When everyone else is being fleeced rotten! The answer must be - because he can and he is a Champagne Socialist. Married to a Human Rights Lawyer dedicated to help the disadvantaged!
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An option, and one that is beneficial to syndicate owners of aeroplanes who receive an 'income'. Set up a company, as the company will have a full tax allowance. ie PPrune Properties Ltd. You will need to provide accounts yearly which will cost you about £500 but any expenses (maintenance) become included in 'loss'.
Of course if you take a salary from that company you will still have to pay tax but you may be surprised by what you can 'take' for the purpose of the company, including travelling expenses (& accomodation) to the property for whatever resonable reason your imagination permits.
In summary, do you want the income rent to go to the taxman or your company. You can set up a company for less then £100, cheaper still if you do it yourself, but the setup packages that are available are hastle free.
Of course if you take a salary from that company you will still have to pay tax but you may be surprised by what you can 'take' for the purpose of the company, including travelling expenses (& accomodation) to the property for whatever resonable reason your imagination permits.
In summary, do you want the income rent to go to the taxman or your company. You can set up a company for less then £100, cheaper still if you do it yourself, but the setup packages that are available are hastle free.
Parabellum is right.
I also let my house out and live in married quarters. This is for service reasons and not due to any desire to make money. Due to financial prudence (real, not Brown's made up concept) my mortgage is low enough for me to make a so-called 'profit' on my house-let. Despite this being my only property and having moved into MQs on posting I cannot claim this cost of MQ rent against my 'profit' as expenses.
However, had I made no attempt to do without, not reduced my debt, instead purchasing a couple of brand new BMWs and adding the loan to the mortgage, having a couple fantastic expensive holidays and generally making no attempt to reduce my debt, I would be now be no worse off in terms of monthly income! Explain that one Mr Brown you utter politics of envy, dogma-ridden left-wing nincompoop.
NP's best advice. If you are anything other than a base-rate tax-payer with no savings/other income etc - EMPLOY AN ACCOUNTANT and consider putting all other debt onto the mortgage, car loans etc. He or she will be at worst cost neutral, and probably save you money. As mine explained, even if I don't save any money, the fees are going into the accountant's beer-fund and not Brown's out of control great-give-away to those who chose not to attempt to better their lot.
Sorry for the vitriol, this particular subject really winds me up - I was brought up by a frugal mother and father, who came from very little wealth, worked hard to provide for us and gave us a fantastic example and an education. Live within your means, save what you can, never a lender or borrower be. What's the point these days?
NP
I also let my house out and live in married quarters. This is for service reasons and not due to any desire to make money. Due to financial prudence (real, not Brown's made up concept) my mortgage is low enough for me to make a so-called 'profit' on my house-let. Despite this being my only property and having moved into MQs on posting I cannot claim this cost of MQ rent against my 'profit' as expenses.
However, had I made no attempt to do without, not reduced my debt, instead purchasing a couple of brand new BMWs and adding the loan to the mortgage, having a couple fantastic expensive holidays and generally making no attempt to reduce my debt, I would be now be no worse off in terms of monthly income! Explain that one Mr Brown you utter politics of envy, dogma-ridden left-wing nincompoop.
NP's best advice. If you are anything other than a base-rate tax-payer with no savings/other income etc - EMPLOY AN ACCOUNTANT and consider putting all other debt onto the mortgage, car loans etc. He or she will be at worst cost neutral, and probably save you money. As mine explained, even if I don't save any money, the fees are going into the accountant's beer-fund and not Brown's out of control great-give-away to those who chose not to attempt to better their lot.
Sorry for the vitriol, this particular subject really winds me up - I was brought up by a frugal mother and father, who came from very little wealth, worked hard to provide for us and gave us a fantastic example and an education. Live within your means, save what you can, never a lender or borrower be. What's the point these days?
NP
Last edited by NATOPotato; 3rd Jan 2010 at 10:01. Reason: detail and spelling!
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Good advice from NP. I own and rent numerous properties and yet still live in SSSA lodgings. My accountant is well worth the £500 PA he gets from me. There are plenty of ways that the accountant can save you money.
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Of course, why not go the whole way?
If mum works part time and just creeps into paying tax, she should establish a company (Mrs Bloggs Ltd) and rent out the spare room in the old MQ to Bloggs Jnr who might be over 18 (or they might not, who knows?). She could even charge for nosebag and dobie..!
The Rent a Room scheme : Directgov - Money, tax and benefits
If mum works part time and just creeps into paying tax, she should establish a company (Mrs Bloggs Ltd) and rent out the spare room in the old MQ to Bloggs Jnr who might be over 18 (or they might not, who knows?). She could even charge for nosebag and dobie..!
The Rent a Room scheme : Directgov - Money, tax and benefits
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Thanks for the comments - it's bleeding annoying as I'm losing money because of being posted away and having to pay for somewhere to live yet going to pay tax because I make a supposed profit, doubly so as the profit only exists on paper due to low interest rates, which in turn are due to the financial crisis destroying the housing market, which in turn is the reason I cant sell my house!! Now thats a stealth tax!! 
Somethings wrong if Joe average is considering getting an accountant!
Well things could be worse, I still have a job and a home.......
Somethings wrong if Joe average is considering getting an accountant!
Well things could be worse, I still have a job and a home.......
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I'm in this situation too. Bloody annoying.
I know I can offset mortgage interest, insurance, repairs and letting agent costs. Anyone aware of anything else I can offset? Can I travel to "inspect" my property and offset that?
Cheers and happy new year all.
I know I can offset mortgage interest, insurance, repairs and letting agent costs. Anyone aware of anything else I can offset? Can I travel to "inspect" my property and offset that?
Cheers and happy new year all.
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Most tenancy agreements include an anual inspection as an entitlement of the owner. I once rented my house out to a serviceman and he did not look after it at all therefore with subsequent tenants I made the checks and thankfully young single mum on DSS benefit did look after 'her home'.
Incidently if you do allow a benefit entitled person to rent, get him/her to pay you after the DSS has paid them. If you get the rent direct from DSS and it proves to be a fraudulent claim you have to paythe money back whereas 'via the tenant' you are out of that particular loop.
The military have little sympathy with home owners posted to the ends ofthe world who elect to take their families with them, yet I am sure that if every military homeowner elected to use DHE at the same time, the families accomodation system would implode.
Incidently if you do allow a benefit entitled person to rent, get him/her to pay you after the DSS has paid them. If you get the rent direct from DSS and it proves to be a fraudulent claim you have to paythe money back whereas 'via the tenant' you are out of that particular loop.
The military have little sympathy with home owners posted to the ends ofthe world who elect to take their families with them, yet I am sure that if every military homeowner elected to use DHE at the same time, the families accomodation system would implode.
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We have a property rented out while we live in quarters....like has been said by others before this is due to service reasons and not a 'buy to let scenario'. If the house is 'jointly' owned with your missus then you only pay tax on your share of the profit. My missus is lower tax band so this saves some dosh. Depending how much you trust her you could put the whole thing into her name if she is on lower tax...
You can also 'employ' her to look after the paper work (checking of invoices etc). Her salary (my accountant suggested about £500 a year) can be deducted from your (higher taxed) share. I suggest you shop about for tax advice, my accountant charges me £70 pa for my letting income and tax return (plus advice on my wife's return) which is almost always less than he saves me.
You can also 'employ' her to look after the paper work (checking of invoices etc). Her salary (my accountant suggested about £500 a year) can be deducted from your (higher taxed) share. I suggest you shop about for tax advice, my accountant charges me £70 pa for my letting income and tax return (plus advice on my wife's return) which is almost always less than he saves me.
Incidently if you do allow a benefit entitled person to rent, get him/her to pay you after the DSS has paid them. If you get the rent direct from DSS and it proves to be a fraudulent claim you have to paythe money back whereas 'via the tenant' you are out of that particular loop.
In answer to OPs original question if property let furnished then 10% of rent allowance on wear and tear per year, also if took out mortgage in tax year rented out then any arrangement fees, solicitors fees etc are allowable, any work undertaken to make property habitable for tenant also allowable like redec and also anything like a British Gas contract to look after central heating and do the gas checks etc.
Any visits, call, letters etc are allowable provided you don't take the P.
Look on bright side in that least you making money on it rather than standing empty and you paying the mortgage and house prices may eventually recover.
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Look on bright side in that least you making money on it rather than standing empty
