HMRC Admin 19 Response

Hi.

Firstly in relation to question 1, you note your total rental income and take away any other allowable expenses. This leaves you with your net profit. You then deduct your personal allowance to leave your taxable income which we assume as 20%. Taxable income times 20% will leave you with a tax amount due. You then work out separately what 20% of your mortgage interest would be and reduce your tax bill by that amount.

For example, total rental income £20000 minus expenses of £5000 equals £15000, minus personal allowance of £12570 equals £2430 at 20% equals £486 tax due. Residential mortgage interest £1000 at 20% equals £200. Tax due, £486-£200 equals £286.

In regards to the previous year you will need to write in asking us to add the interest figure in SA105 box 44.

Thank you.

Hi Ganshiv82,

There are no Income Tax implications on the receipt of a cash gift unless the cash gift generates interest or dividends. These would then potentially be subject to tax. You can see further guidance here:

Tax on savings interest

Tax on dividends

Thank you.  

Hi.

The 0% VAT in relation to energy saving materials is for the materials and installation of these materials. You can see guidance here:

Energy-saving materials and heating equipment (VAT Notice 708/6)

Where the installation of energy saving materials involves anciallary supplies please see section 2.7.2 of the following guidance:

Installations of energy-saving materials

If existing solar panels are upgraded then this can be installed at the 0% rate of VAT as long as the criteria is met in the above link.

The 0% VAT would relate to the materials and to the installation of these materials but would not include services like scaffolfing which are not of themselves energy saving materials or installation services.

We would recommend looking at the guidance carefully and if you feel that the guidance does not fully answer your questions then you would need to put your queries to our Written enquiries Team.

VAT: general enquiries

Thank you.

Hi Peter Chan,

If you qualify for split year then you only report any foreign income for the UK part of the year. You can see guidance here:

RDRM12000 - Residence: The SRT: Split year treatment: Contents

If you do not qualify then you will need to report all your foreign income to the UK. You can see more information here

Tax on foreign income

The following guidance will help you work out if split year treatment applies. 

RDRM12150 - Residence: The SRT: Split year treatment: Case 4: Starting to have a home in the UK only

Thank you.

Hi,

In the UK, as the bills are sold at a discount, they may be seen as deeply discounted securities (DDS) that do not pay conventional interest.  

The gain on a DDS is always taxed as income to avoid someone claiming it as capital gain. It seems these are often issued as a type of corporate bond.

On a foreign investment the income is the difference between the purchase and redemption price after each has been converted to sterling on the day the transactions took place, so includes any foreign exchange gains.  

Losses cannot be deducted.

Thank you.

Hi Jillian Hainer-Jones,

Please see the guidance here:

Application for a State Pension forecast

Thank you.

Hi Tommy Leung,

Yes, that is correct.

Thank you.

Hi rl11,

The amounts should be declared annually and this will be reported to HMRC directly.

Thank you.

Hi,

There are no Income Tax implications on the receipt of a cash gift, unless the cash gift generates interest or dividends. These would then potentially be subject to tax. Further guidance can be found here:

Tax on savings interest

Tax on dividends

Thank you.