Tax Tips Q&A: Completing Your Tax Returns

Tax Tips Q&A is back for 2022! This month we will be answering questions all about tax returns and self-assessments. 

Do I Need To Include This Property In My Self-Assessment Form?  

Question:  

If one owns a property jointly and it is not being let at present, but is occupied by a family member who pays the outgoings, does one still have to inform the tax office on one’s return? And can one of the joint owners be elected as the owner responsible for declaring income when it is let in the future?  

Answer:  

If in a tax year you do not receive any rental income you do not need to inform HM Revenue & Customs on a tax return. If joint owners receive rental income from a property (e.g. four people receive a quarter each), then each one is responsible for declaring his quarter on his own tax return – one of the joint owners cannot be made responsible to declare on behalf of all of them. 

My First Tax Return – Can I Offset These Costs? 

Question:  

When making the first tax return on a rented property, can I offset the deposit, the solicitor’s fee and the stamp duty against tax?  

Answer:  

I presume the ‘deposit’ means the first payment for the purchase of the house. These three items relate to the purchase of the house and are therefore considered to be ‘capital expenses’. They cannot be entered on the first tax return for a rented property, to offset against rental income. Instead, when the property is eventually sold they should be entered on the capital gains supplementary pages of the tax return, to be offset against the capital gain. See HMRC’s guidance here. 

Tax Implications Of Putting My Current Properties Into A New Company?  

Question:  

I sold property and invested into a limited company. Unfortunately, the limited company failed. Can the money invested be recovered in any way? When I sell something in the future at a gain, can capital gains tax (CGT) be offset? Can any deductions be made on my normal income tax returns? It would really help in deciding if I should put my current properties into new limited company, with the CGT offset for past loss.  

Answer:  

If the shares have become of negligible value, they can be treated as a capital loss, and offset against current or future capital gains; see HMRC’s Capital Gains manual here. Under certain circumstances,  such a loss can instead be set against income; see HMRC’s Venture Capital Scheme manual here. 

For more tax advice and guidance, check out ‘247 Property Tax Questions Answered’ included in the Landlords’ Tax Pack. In this book, Arthur Weller’s answers Property Tax Questions based on real life scenarios.