Pay tax on savings but not on rental income

TaxDinosaur

Hello

My only taxable income is about £10k per year on savings interest and £4k per year rental income.

I have always paid 20% tax on the savings interest even when the amount of interest I was earning was below the personal allowance. So I assume I could claim a tax refund for some of this if I so wanted.

I invested in half of a rental property two years ago which gives me the £4k per year income. I haven't paid any tax on this or declared it in any way to the Inland Revenue.

I previously assumed that I didn't need to declare the rental income as it was less than my personal allowance, and of course i was paying tax on the savings interest anyway.

I've since read upon tax and now understand that I'm meant to declare all this income (savings interest and rental) to the Inland Revenue.

It seems that when I declare, I could actually be due a refund overall, if I claim the tax on interest due back over the past 5 years or so. I understand also I could have to pay fines for late self assessment.

My question is, what is my best move? Should I phone/email the Inland Revenue with the above information or do I not need to bother given that I assume I pay more tax overall than I need to?

nomunnofun

Interesting one - I think that I would complete an R40 for all years and send them in. This will process the refund while making HMRC aware of the property income.

http://www.hmrc.gov.uk/forms/r40.PDF

Not strictly the correct approach but it will achieve the end result.