Is Self Assessment needed for £5200 rental income?

SnowWhiterThanWhite

My elderly parents have always had to do S.A. as they owned 2 flats which were rented out. One flat was sold in May 2010, so am just about to do S.A for year 10/11 to pay their capital gains tax etc.
Other than the income from the one remaining flat, they only receive small income from state & private pensions.

My question is, the rental income they currently receive works out to approx £2600 each, less expenses, ie, insurance, is this over the threshold for having to do a S.A? The info below was on the Inland Rev web-site:

• £10,000 or more income from property (before deducting allowable expenses)
• £2,500 or more income from property (after deducting allowable expenses)

In my parents case, no, they don't receive more than £10,000 proeprty income, but they do receive (depending on insurance costs) just over £2500

Many thanks

BoGoF

Not sure in what context you mean - for 2010-11 or future years?

SnowWhiterThanWhite

BoGoF wrote: »

Not sure in what context you mean - for 2010-11 or future years?

Sorry, I did mean for future years

BoGoF

In that case it will depend on your parent's circumstances. It is only if the net profit is under £2500 and you agree for a restriction to be made in the tax code for the property income that a tax return is not required.

Even if it is under £2500 but you tick the box saying you don't want non-PAYE income in the tax code a return is still required.

SnowWhiterThanWhite

BoGoF wrote: »

In that case it will depend on your parent's circumstances. It is only if the net profit is under £2500 and you agree for a restriction to be made in the tax code for the property income that a tax return is not required.

Even if it is under £2500 but you tick the box saying you don't want non-PAYE income in the tax code a return is still required.

The only (other) tax they pay is on pensions and savings - all of which is taxed at source anyway. So, if their income from property is below £2500, and they tick the box you mention above, then there will be no need for a SA?

BoGoF

Do not tick box 3 on page 5 of the main return and assuming there is no other SA criteria (e.g. reduced age allowance) then they should be removed from SA.......I say should but maybe cutting it fine for 2011-12 now.

Pennywise

You may find that the tax due cannot be fully collected from pensions and so SA may still be needed. Tax can't be deducted at source from state pensions, so it really depends if there's any tax code left for the occupational pensions, and if not, it will turn into a K code which may still not collect enough as there are limits to how much tax can be deducted under PAYE (i.e. % of gross). So it will depend on the amount of state pension and the amount of occupational pension. If all incomes added together isn't that far over the age related personal allowance, then it may be possible to deduct enough tax under PAYE from the occupational pension. You really have to do the sums and if you think it's possible, write to HMRC and ask them to code out the state pension and property income in the PAYE tax code for the occ pension.