Tax or no tax

ET1976

Sammy85 wrote: »

Is your 9-5 job PAYE? If so you wouldnt fill in a tax return, its taken automatically at source.

yes. so I don't do a tax return by default. so how would I pay the tax owed on, say, £2499 rental profit?

Kavajo

It is your responsibility to declare any taxable income. While you may think it is optional and they will never find out, you should be mindful that tax evasion is a serious offence and you can be jailed for it. You should advise your tax office who will probably ask you to do a tax return.

This might actually be a good thing for you, because as you are making a loss on the income from property, you can carry the loss forward to subsequent years, meaning that even if you start to make profit in future, you will not have to pay tax until you have recouped this loss. Of course there are still lots of allowable expenses and the usual personal allowances too, though if you have other income (job?) then you will have used these already.

Gwhiz

ET1976 wrote: »

yes. so I don't do a tax return by default. so how would I pay the tax owed on, say, £2499 rental profit?

I'd call the tax office and then they would send you a tax return

00ec25

Gwhiz wrote: »

I THINK it's a case of "if you are not doing a tax return anyway, your income is low enough that you are not liable for tax even with a property profit of under £2500"

I could be wrong though!

You have indeed misunderstood

IF YOU HAVE ANY INCOME FROM PROPERTY, IRRESPECTIVE OF WHETHER YOU MAKE AN OVERALL PROFIT OR LOSS, YOU MUST INFORM HMRC - there is no minimum limit £ nor are you able to receive any tax free income except with lodger(s) & claims under the rent a room scheme

The 2,500 figure is the magic amount below which HMRC may (at their discretion) collect any tax due by adjusting your tax code assuming you have a PAYE source of income from which they can collect it see here: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013435

If you make a loss, the tax code cannot be adjusted to give a refund, all you can do with a loss is carry it forward to be offset against any further property income related profit

Sammy85_2

ET1976 wrote: »

yes. so I don't do a tax return by default. so how would I pay the tax owed on, say, £2499 rental profit?

You would ring up the tax man and ask him, he will send you a tax return form to fill out.

As you are already earning from another job then your tax free allowances will most likely have been eaten up, therefore any PROFITS on you rentals are taxable.

00ec25

ET1976 wrote: »

yes. so I don't do a tax return by default. so how would I pay the tax owed on, say, £2499 rental profit?

it is collected thru your tax code adjustment see post above

ET1976

So this should read

"So if the income is less than £10,000 before expenses and the profit is less than £2,500 you have no need to complete a tax return if HMRC allow you to pay the tax through PAYE"?

I thought that was the case, just wanted to be sure. (This was a hypothetical question, I do complete a tax return as my profit is over £2500 anyway).

silvercar

Source:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/SelfAssessmentYourTaxReturn/DG_4017116

Which states you don't need to complete a form if the profit is less than £2500. Of course if tax is due you will have to pay it, so the inland revenue will need to be informed, and will probably then request a tax return. The point I was making is that you won't be fined for non-completion of a tax return if there is no obligation to complete one.