RLA Tax Centre

FREE Landlord Tax Secrets Guide

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Your Tax Questions Answered

Arthur Weller
Property Taxation Advisor

Arthur Weller, featured in the Financial Times and an Advisor to accountants and other tax specialists, has a reputation that is renowned in the industry and in conjunction with the RLA and Property Tax Portal Arthur has agreed to answer your common tax questions in the RLA Tax Centre.

Each month, Arthur will answer a few of the most common questions asked on this page, so feel free to put your question across now.

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Arthur’s Answers

Question

Can you change from claiming 10% wear and tear for tax purposes, to renewals sytem if property is no longer fully furnished (only has carpets, curtains, fixtures and fittings but not tables chairs or beds), or do you keep on claiming the 10%? Notes on HMRC say that you once you choose a system, you cannot change but does not mention what to do if no longer fully furnished.

Answer

If you look on http://www.hmrc.gov.uk/manuals/pimmanual/PIM3200.htm you can see that the 10% wear and tear allowance cannot be claimed if the property is classified as not fully furnished.

You can also see there that 'It isn’t possible to chop and change between the wear and tear allowance and the renewals allowance from year to year.'

Therefore, I would ...more

Question

My wife and I own a property as Joint Tenants as opposed to Tenants in Common. As Joint Tenants, are we forced to split the income 50% / 50% for tax purposes or can we vary this? Due to our respective incomes it would be more advantageous if we could apportion all of the income to my wife.

Answer

In order to achieve what you want, i.e. more of the rental income to be taxed in your wife's name, you need to do two things.

Firstly, you need to transfer a corresponding proportion of the property into your wife's name, either by formal conveyance or by deed of trust to transfer beneficial ownership.

Secondly, within 60 ...more

Question

I have a property in Cyprus which is available for rent all year and gets rented on average about 15 to 20 weeks per year. I have been claiming back my losses on my UK tax paid. Is this still possible for 2010/11 and going forward into 2011/12, etc?

Answer

In 2004 Cyprus joined the EU. All the members of the EU are members of the European Economic Area (EEA). Not so long ago HMRC agreed that the rule that losses from furnished holiday lettings (FHL) can be set against general income in that tax year (like regular trading losses) applies not only if the ...more

Question

I would like to know how the cost of installation of a renewable energy system, such as solar panels to generate electricity, should be treated for tax purposes. Could it be offset against rental income or is it classed as an improvement and therefore capital gains? I am not sure as it is effectively improving the sustainability of my housing stock.

Answer

There is not a clear cut answer to this question. Please look on the HMRC Property Income Manual page PIM2020 (http://www.hmrc.gov.uk/manuals/pimmanual/pim2020.htm). However, in my opinion this would be considered an improvement, and therefore capital expenditure. It should not be claimed as revenue expenditure to reduce the taxable rental income, but added on to the capital ...more

Question

I have overseas property which is being used by my brother and his family overseas. He does not pay me any rent but pays for the upkeep & maintenance charges. Do I have to inform HM Revenue & Customs (HMRC) about this?

Answer

No you don't have to inform HMRC about this. Since he does not pay you anything, nor do you receive any benefit from what he does pay (he just makes good what he uses) there is nothing to declare.

...more