Avoiding tax on rent

Hi After getting married I moved out of the house I lived in for 6 years and rented it out for the following 1.5 years. This was a cash only arrangement and was not declared to the inland revenue. I plan to sell the house soon. What are the chances of the taxman catching on to sale and asking ackward questions about past use? Basically can I avoid paying tax on the past rent? I currently to file a tax return because of my salary.

thanks for any advice Steve

Reply to
Steve
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Naughty. There's still time to tell them. Next week will be too late.

No idea, but if they do, then you'll be in line for a penalty for not paying tax due on your 2002/03 rental income by the end of

*THIS MONTH* January 2004. You had better get a cheque off to them PDQ.

You probably can, if you're lucky, but only by breaking the law. Don't risk it, it's not worth it. Do you own the house outright or is there mortgage interest being paid? You can deduct this, and insurance, and any other reasonable expenses, from the rental income. You only pay tax on the profit, which won't be very much, will it?

The good news is there won't be any CGT to pay on the sale proceeds, by the look of it.

Reply to
Ronald Raygun

Wasn't the tenant a lodger? Of course he was!

Reply to
Fred

No. Rent-a-room scheme requires the landlord to be resident.

Reply to
Ronald Raygun

I know in theory you are certainly correct but I knew someone some years ago who allegedly used a room in the housed - locked of course so he could say he was resident. I don't think he used the room very often though!

Reply to
Fred

No it is not possible to avoid the tax.

It is possible to evade the tax and not get caught.

Hint, tax avoidance is *always* legal. Tax evasion is a criminal offense, - one which I believe can now be prosecuted in a magistrates court (albeit with the mags lower sentence limit, - but I would have thought that non declaration of a small amount of rental income wouldn't rank more than 2 years anyway)

tim

Reply to
tim

Whilst "tax avoidance" is indeed the technical term given to lawful means of arranging one's fiscal affairs to minimise the amount of tax to pay, and "tax evasion" is the term given to unlawful means of paying less tax, it is not true that phrases like "avoid the tax" necessarily refer to tax avoidance as distinct from tax evasion.

Basically, there are many ways of avoiding paying tax. Some of them are unlawful, and are called TE, the rest are called TA.

To evade the tax and not get caught does, after all, avoid paying.

And while we're being pedantic, there is no s in offence.

Reply to
Ronald Raygun

I own it outright and pay higher rate tax. It will be somewhere in the region of

2k.

Steve

Reply to
Steve

Just pay it and look forward to all that lovely tax free capital gain. Remember there will be two tranches of rental tax to pay, since the renting straddled two tax years. One now, one next year.

Reply to
Ronald Raygun

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