To be worried

[deathandtaxes123]

My husband owns a flat that he rents out. My name isn't on the mortgage and our finances are completely separate bar a joint savings account with money in it that we received when we got married.

He's rented the flat out for almost three years. It crossed my mind a few weeks ago that he should probably pay tax on his rental income profit (about £90 a month after he pays the mortgage)

He told me he doesn't pay anything and doesn't plan on doing so.

Obviously the flat isn't mine and I don't gain financially from it, nor are our day to day finances joined up. Will I be held accountable if HMRC come calling?

I'm really worried

No one?

He should be paying tax on any "profit" and also any part of the mortgage payment that isn't interest.

Many landlords don't bother paying tax, however, this doesn't make it right.

You won't be held liable if he's caught though.

How much would the tax be? I would advise him to start putting it away and then declare it. If HMRC catch up with him first he'll have a big fine to pay on top of what he owes.

Actually I think you will be liable as any property bought by either spouse is a marital asset, so if you were to divorce you would have equal rights to it so I would assume that it would be seen the same way in this case.

He makes less than the self assessment amount so it would have to be done through PAYE.

He's completely refusing to discuss it with me now

What's his salary? If he's a 20% tax payer then this rental income would be taxed at same amount and should be declared on self assessment tax return. If it IS £90 per month profit then that's actually only a total of £648 for the 3 years, or double that if he's a 40% tax payer. Are my assumptions and maths right- I may be talking bollocks. Also, any expenses on the property, such as unpaid rent or new bathroom/ oven etc would reduce the profit further, and hence the tax bill. In terms of liability, strictly speaking he's liable not you. That said if it was a large amount then HMRC could claim against his half of the equity in a shared residence, which would affect you if you have a joint mortgage on your primary residence.

Also if it is furnished up till this year he can deduct 10% rental income as wear and tear. Even if he makes no profit he should be declaring income and expenses of rental property even if on PAYE or no other income or as a non tax payer

Whether he needs to pay tax on it will depend on what his other income is. If it's above the threshold then he should declare it on a self assessment form.

I have long been convinced that an awful lot of private landlords don't pay tax on their rental income. I don't know why there isn't some system whereby you are obliged by law to register a rental property. But I have heard of tenants who are very disgruntled with their LL, and shop them to HMRC. So best tell him not to piss his tenant(s) off!

If your name isn't on the mortgage / deeds / you don't receive the rent you are not liable to tax. Your husband is though and this is potentially tax evasion. He should see an accountant.

He's a 20% tax payer. The property we live in is mine so we don't own anything jointly and the account that his tenant pays the rent to is his sole account.

I literally have no connection to the property other than being married to him.

likemymother I think loads of them don't pay tax. I really don't agree with avoiding tax in the slightest.