Question

Compute property business income for three properties (9 marks)

1) Matthew Hartzog rents out as an individual taxpayer, a furnished room in his main residence. This is as living accommodation for a male colleague at £7,500. Matthew also paid allowable expenses of £400. (2 marks)   

2) Matthew also lets out a first house throughout the tax year 2018/19 at a monthly rental of £2,800. Matthew has a mortgage loan on the house and in 2018/19 he makes capital repayments of £3,800 and pays interest of £18,000. Matthew has other expenses (all allowable) of £8,400 for 2018/19. Matthew has other taxable income (after deduction of his personal allowance) of £90,000 in 2018/19. (4 marks)

Matthews’s second house was let out furnished through six months of the tax year 2018/19 on monthly rental of £500 payable on the 10th of each month.

Matthew purchased a new refrigerator costing £800 for the tenant on request. Matthew had not previously provided refrigerator.

Matthew spent £700 on maintenance and repairs

Matthew replaced old curtains with new for £500. Old curtains were sold for £50.

Compute Matthew's income tax liability in respect of his property business income for the tax year 2018/19.