HOw much tax do I need to pay when I let my PPR and rent a house to move for a job?
I know that ther have been similar questions to this but I wonder if you could clarify please? If I let me house at say £1,000 rent and rent another for say £1,000 rent then if I understand correctly I pay tax at my marginal rate on the full £1,000 after deduction of allowable expenses. But that would mean that I have say £570 left if I paid tax at 40% and had £50 expenses, ie 1,000 - 50 = 950 x 0.6 = 570. However that would mean that I then had to pay the balance of 1,000 - 570 = 430 from my other taxed income to put myself back where I started. Net result is that I am £430 worse off. Is this correct and reasonable? Clearly I should not expect to make an untaxed profit but also I should be allowed to deduct legitimate costs of generating the rental income. In this case it costs me £1,000 to generate £1,000 of income. HMRC say that they treat rental income as a business but that is not true if the statements above are correct?
I imagine very many people are in a similar position and would welcome views. Many thanksReport