Tax return - needed?

keepsquirrelling

Hi, my wife rents a house out which 09-10 she made approximately £3000 profit after all the bills were paid, 10-11 it's looking like she will barely make half of this, so my question really is does she need to complete another self assessment when she falls under the £2500 profit on the house? We use an accountant to file the return and they can't tell me the answer, but they have said that my wife has a request from HMRC to complete one. I fear that once you are on HMRC's books you will struggle to get off it but I would be keen to know if anyone has any advice?

System

You are paying an accountant to complete the tax return on your behalf and this accountant says "They cannot tell you the answer" - 1st thing to consider is change your accountant because it sounds like they are a not worth the price.

If you have received a notice to complete a tax return, then you have to complete it. If you then no longer meet the requirements to complete a return, you can ask HMRC to change your records which they may agree to do for subsequent tax years.

However, in your type of case, I personally would doubt that HMRC would agree to it because with property rental income it is likely to go up and down every year so HMRC will need to know the amounts.

keepsquirrelling

Many Thanks BAA1, I think the accountant will be given the heave ho and we will do the return ourselves in that case! I'd best go and make the call to him now! Much obliged for the speedy reply!

00ec25

keepsquirrelling wrote: »

, so my question really is does she need to complete another self assessment when she falls under the £2500 profit on the house? ?

I know the guidance states that >2,500 profit you must complete a tax return but the fact is once you are on their books and, as stated before, if they ask you for one in subsequent tears you must continue to complete them until HMRC formally tells you to stop, you do not have the discretion to stop submitting if below 2,500.

BTW, the £2,500 limit is not a tax free allowance, it is simply the figure below which HMRC may (if you ask and they agree) collect any tax due by adjusting your tax code. You are always and irrevocably required to notify thenm of your profits, from propetrty renting, even if it's only £1.

The £2,500 threshold is used to differentiate between when you can send them a letter notifying only of your profit or when you have to do the more formal full blown tax return showing all your income

antrobus

I'd have a read of this here;

Tax on rent from residential property lettings
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013435

What it says is this; "If you're employed, or getting a pension through PAYE, and your taxable income from property is less than £2,500, your Pay As You Earn (PAYE) tax code can be adjusted to collect the tax on your property income each year. Just ask HM Revenue & Customs (HMRC) to send you form P810 to report your income each year."

If the wife isn't on PAYE then she will always have to complete a SA return, no matter how little profit she makes on her property business. And even if she is on PAYE and making less then £2.5k she will still have to complete a P810. She's in business and thus (at least potentially) making a taxable profit which has to reported to HMRC in some form or another.

00ec25

antrobus wrote: »

What it says is this; "If you're employed, or getting a pension through PAYE, and your taxable income from property is less than £2,500, your Pay As You Earn (PAYE) tax code can be adjusted to collect the tax on your property income each year. Just ask HM Revenue & Customs (HMRC) to send you form P810 to report your income each year."

If the wife isn't on PAYE then she will always have to complete a SA return, no matter how little profit she makes on her property business. And even if she is on PAYE and making less then £2.5k she will still have to complete a P810. She's in business and thus (at least potentially) making a taxable profit which has to reported to HMRC in some form or another.

yes, initially you write them a letter and they will send you a P810 to complete if they accept, from your letter, that you do not need to do a full SA return.
You have to get it from them, you can't pre-emptively fill it out as it has to be sent to you by them