Hi,

I’m after a bit of help on whether I need to fill in a self assessment tax return this year. The government site isn’t very clear for a novice like me!

I rented my house out on 16th April 2016. In the months before I spend approximately £2000 preparing the house to be rented out (new carpets, decorating etc.). The house is still rented out and I currently live at my girlfriends parents house.

Do I need to fill in a self assessment tax return this year? If not will I still be able to claim the expenses I spent in the previous tax year?

You won’t be able to claim for repairs or decorating costs incurred before your first period of renting began.

Tax returns are due in Jan 17 for the tax period April 15 to April 16 and so no, you don’t need to submit one this year.

You may also rack up a capital gains liability for the period of rental, or maybe a capital loss.

I’m going to sell it next year so I think I’ll avoid any capital gains tax. I’ll have owned it for 5 years and rented it out for 1.

If you started renting out on the 16th April this year then you don’t need to submit your return until 31st January 2018.

If it was me then I would have incurred the £2000 cost in the same tax year you started renting the house out so you can offset that cost against your earnings. Remember you won’t be able to claim 10% wear and tear as well as the £2k you spent.

Mortgage interest payments can also be offset against the rental income

only the ‘interest’ part

You would never have been allowed to claim for carpets anyway

Examples of capital expenses that wouldn’t normally be allowable include:

adding an extension
installing a security system if there wasn’t one before
replacing a kitchen with one of a higher specification
replacing carpet
replacing a sofa
replacing a fridge

If you’re not particularly savvy at this sort of thing, I would recommend getting an accountant. I use a local one to draw up basic accounts and complete my self-assessment every year for a couple of hundred pounds. They have more than saved me that in tax, as there were quite a few things I didn’t know were deductible. I just email them my receipts and invoices every summer and then don’t worry about it.