Tax on rental income

Bayview 2019

Registered User
Messages
7
I have two BTL properties and for last few years I carried forward losses so I did not pay huge taxes- this year I will be paying tax - is there a precetage of the rent I should set aside for the end of year tax Bill ? My rents are higher than the mortgages but I just end up spending the extra and now I’m concerned re not having the tax money at the end of the year
 

moneymakeover

Registered User
Messages
674
Calculate your annual profits
Income minus expenses
Tax at 40%
Divide by 12
Save that each month
If you can't afford the tax one option
might be reduced capital payments
Another option might be to reduce outgoings eg pension contributions
 

asdfg

Registered User
Messages
1,604
I take it you are aware that mortgage interest only not the full mortgage payment is allowed as an expense and the properties have to be registered with the residential tenancies board

 

elcato

Moderator
Messages
3,627
Are you a PAYE worker as well ? Both Tax and USC will depend on your total annual income received from all work over the year.
 

Frank

Registered User
Messages
1,687
Revenue look for a prepayment too which is credited to the following year, great if you have it as you are ahead a little.

I would budget for 40% of all the rent
Expenses are limited, unlike any other business
 

Zenith63

Registered User
Messages
806
The tax return you’ll be due to submit (and pay) in October this year is for your income from 2020. As 2020 is already over, you know all your income/expenditure, so you can ask your accountant to prepare your tax return now. It will get it out of the way and also let you know exactly how much you need to be saving up without guessing.

As others have said you’ll likely need double the tax payment as preliminary tax for 2021, but again your accountant will work all that out and just give you a figure.
 
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