The Tax Preparation Blog

Archive for December, 2009

Question: Help me getting new income tax calculator as per 2008 2009 Union budget of India by Chidambaram?

Answer: http://tax-calculator-free.page.tl

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R8.1bn in personal tax cuts

Missed the Budget? Catch up with all the news in our special Budget 2011 section. Finance Minister Pravin Gordhan has unveiled personal tax cuts totaling R8.1-billion across all income brackets in the Budget for the 2011-12 financial year.

Question: tax return UK?

have started to let a property there is no morgage on the property.
I have a letting agent who has 10% and tax is paid on this .
I then have a lump sum every moth, have got to complete my first tax return from dec 06- april o7
would you do it yourself on line or get an accountant to do it.
the property is un furnished, what sort of things can I claim for ?
serving boiler and fire, insurances, buildings, rent protection, any modernisation to the property, please help starting to panic about it all now.

Answer: well you can do it online if you feel comfortable doing it of fill out the form that you received from the tax man.

what you need to do is setup some form of bookkeeping to record all you income and expenditure and then produce a small profit and loss to work out your profits.

now note that the income will be the gross rent before the commission and tax is deducted, not the amount you actually receive. if unsure your agency will be able to tell you what figure to take.

the 10% commission fee your agency take is an expense and needs to be recorded as professional fees. the tax deducted isnt part of working out your profits, but need to be included in the calculation of tax. will come back to this later.

the expenses you can claim for are anything that you pay for relating to the house. so basically anything you spend on the house you can claim for. this includes such things as building insurance, repairs, servicing of the boiler / fire etc..rent protection insurance is a grey area, this could be seen as a personal expense as its basically covering yourself for loss of income, so I would be a little wary of classing this as a claimable expense. you can claim for travel to and from the property, best to use 40p per mile round trip if by car, or use the cost of a bus or train ticket if you use them. you can claim for elec, gas, council tax if you have paid any of this, I assume that the tennant pays these but if the property was empty for any period of time then gas, elec, or council tax that you have paid can be claimed for that period.

modernisation expenses can fall either into the repairs and renewals category or the capital expenditure category(repairs & renewals is deductable against your income, whilst capital expenses are not and then added to the cost of the house) the way modernistion or repairs expenses are worked out is that is anything is replaced on a like for like with a modern day equivelant, then its classed as a repairs. if its pure modernisation ie, and extention to the building then it is capital.

for example, if you have single glazed windows and replace them with double glazed, then this can be classed as a repair
as the old windows are replaced by modern day windows and any new house now has double glazed as standard. this also applies to repainting the property and recarpeting it as long as it was done on a like for like basis.

another example is that if you replace the kitchen, and end up with say more cupboards or an additional appliance such as a fixed washing machine or dishwasher, then this is classed as capital because the kitchen has been improved to add more storage space and appliances. therefore this would increase the value of the house considerable.

so modernisation expenses can be difficult to determine, but if you use the examples above it should soon become clear what is classed as a repair or renewal and what is capital.

any capital expense will be used to increase the costs of the house and offset against the income you receive if you sold the property and were subject to Capital Gains Tax.

if you maintain the property, such as do the gardening or pay some one to do the gardening, you can claim for this, if you did it yourself you could use a basic cost of £X per hour to work out the notional cost and include this in your figures.

in all fairness the above is probably a bit too much to get ya head round, it would be easier to get an accountant to do it for you, yes it could cost between £200-£400 (depending on where you live) a year for them to do the rent accounts and your tax return, but at least you would know it is being done correctly, then after a couple of years you may understand how they do it and then have ago yourself.

now for the tax paid, once you have calculated your profit, this is added together will all other income you have such as employment, bank interest, dividends for shares held etc…once the total amount of tax due is worked out, the tax deducted from you rental income is then offset against the total tax due and you just pay the difference.

hope this kinda make sense. its not easy to give a thorough answer without seeing you records, which is why if you see a local accountant, they should give you a free consultation (about 1 hour) to discuss everything with you and then tell you how much it will costs.

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GST – Minister Given Enormous Power Again

As a member of the Pakatan Task Force on Anti-GST, I write in response to the letter that appears in Views of the The Star, Thursday, 24th December 2009.

London accountant earns accolades olympia testimonials 2009