Tax credits- do I include this

[Shakey1500]

Just received the renewal pack. Obviously they're asking us to declare our salaries and "other income" for April 2011- April 2012. As of May 2012 we will be in receipt of a rental income monthly. So technically am I right in saying that I don't have to declare the monthly amount on the "other income" as we didn't receive any in the time period specified?

Also does receiving this income count as a "change in circumstances"? Not for 2011-2012 but going forward? I know I have to inform them of any changes to working hours/salaries/childcare as we go along but do I have to notify them of the rental we'll be receiving? Thanks

I definitely would as the last thing you want to end up with is being paid too much & the having to pay it back.

You must declare all your taxable income if it has changed significantly since the last tax year. If you've taken in a lodger and the rental income comes under the 'Rent a Room Scheme' there's an amount you can receive each year before it is liable for tax. If you're letting a property as a landlord and you have costs associated with that property, they can be deducted from your rental income and only the retained profit is taxed.

Don't include it in the figures for 2011-12 as you haven't had the income in that tax year! Tax credits are usually based on your income for the previous financial year.

You don't have to phone up and tell them about it the increase in income before the next renewal, but if your income has increased by more than 10K compared with the previous year then you may have to pay some money back at next renewal.

Thank you all for replying.

Cogito It's a property rental. When you say "costs associated with the property" does that include mortgage repayments? As in, if we receive £600 in rent but the mortgage is £550, do I declare an "income" of £50 on the tax credits form?

Not necessarily. The only part of a mortgage you wouldn't be taxed on is the interest. I strongly suggest you telephone HMRC and ask them exactly what you need yo declare for this tax year.

Sorry I worded that badly. The part of a rental income that covers the mortgage is only tax free for the interest part of the mortgage. You cannot offset the repayment part.

If you're a landlord there are allowable expenses that you can offset against your rental income in order to get back to a taxable income figure. I'm not an accountant but this link called 'Record Keeping For Landlords' on the DirectGov site is quite informative. Mortgage interest is allowable, capital repayment isn't, for example.

You'll need to know the final amount to declare to HMRC for taxation purposes as well as for Tax Credits.

Thanks for the links and the advice :)