Income Tax

[Kathyan]

We have just found out that the IR are still taxing my husband as though we are still receiving rent from our property. I have been living here again for the past two years! They are going to sort it out, but can anyone tell me at what rate will they have been taking tax on the rental income?

[Loosehead]

It will just form part of the total income from all sources and then be taxed accordingly so the short answer is, it depends on what other income is present. If for example he has a job earning enough to pay HRT then the rental income minus expenses etc will then be taxed at 40%. Hard to say though without knowing your exact circumstances.

[jedimistress]

Just write to your tax office and let them know what you have written here and they will give you a rebate on any overpayments you may have made.

[Kathyan]

Thanks. We have written to the tax office and are waiting for a reply. Just wondered how much refund we could look forward to!

[Im a BusyBee]

surely he has to fill in a tax return and the tax is calculated from figures within that??? how would the IR know what the income rental would be and also the expenses without figures submitted from him???

[kags]

I agree with Im a BusyBee - if HMRC has been including estimates of rental income in your husband's tax code, then they would have been issuing him with an annual tax return to confirm the correct figures. How exactly has the tax been paid?

[jedimistress]

Not everyone with rental income has to fill in a tax return. Some people have it coded in if it does not vary too much from year to year. It cuts down the paperwork and workload at the tax office. Obviously it;s up to the individual to check that their coding notices aren't too off the mark with their rental estimates.

It depends on your other earnings but I'd guess 22% of it would be refunded.

[Kathyan]

Thanks for all your answers. He did fill in a tax return when we moved back to the property. He told them that we had moved back in 2005. I'm not sure if the tax on the rental income was paid in arrears or not, but anyway we have still been back for nearly two years, so it should have been sorted before now!

[Im a BusyBee]

this is why its important to check tax codings the IR are good at not getting them correct.i know circumstances are not the normal with rental income being involved but i do wonder how many other people are being taxed incorrectly - many people just accept whats sent to them cos they dont understand or know differently

[Kathyan]

I have been telling my husband for ages that his code was wrong, but would he listen!?