NEWTH TALKS TAX - JULY: Tax writer of the year John Newth solves your tax questions

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**For more of John Newth's exclusive contributions, visit the Newthwire archive***

  • Buy to let properties

  • Specialised professions

  • Rent a room relief

  • Amending tax return

  • Class 2 NICs

Buy to let properties

Martin enquired, on 25 July 2006 (157594), whether tax relief on mortgage interest would be available if the purchase of a buy to let property was financed by remortgaging his home. Also, as he is a higher rate taxpayer, do profits have to be divided 50:50 between himself and his wife?

A number of respondents replied to this query. David Lochhead had stated, correctly, that it was the purposes of the borrowing that determined whether tax relief would be available on mortgage interest. Buy to let,...

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19th Jul 2006 07:28

Rent-a-room moral dilemna?
Here's a question. You rent a room in your house to your 10 year old daughter for £4250 a year who then sub-lets the room to Z Company for £5000 per year. Z Company just happens to be 100% owned by yourself. Your daughter has no other income. No tax. What's your view?

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19th Jul 2006 15:09

Actual personal residence
I fear that sub-letting to the company disqualifies rent-a-room-relief, as the relief is for personal residential purposes, i.e. personal living, sleeping and eating.

If I am wrong, then I am sure that HMRC would find some way of attacking the scheme under 'unacceptable tax avoidance'.

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10th Jul 2006 13:49

Class 2 contributions?
Does Sarah really mean Class 2? Her query does not mention the client being self employed, so she would not be entitled to pay Class 2.

Class 3 contributions may be appropriate, but it would be necessary to look at a pension forecast first to ascertain whether they were worthwhile.

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