made redundant. Got BTLs - can i use BTL profit as IT personal allowance?

MoneySavingMission

I was made redundant last year. I have not worked since and claim no benefits.

I have a few BTL's running on a slight profit based on last tax year. Given that I am not working now, can I use this BTL profit as Income Tax personal allowance to save me paying % tax on what little income I now have?

Please help if you can.

mulronie

BTL income (ie. rent minus allowable costs) is no different to other income as far as HMRC are concerned.

You still have your personal allowance, so when you fill in your tax return if your TOTAL income (interest, dividends, BTL, etc) is less than the personal allowance no tax will be due.

zygurat789

Rental income is charged to Income Tax. So ok.

MoneySavingMission

thanks. So basically i can earn a cumulative profit on BTLs up to level of personal allowance (9,440?) without paying tax? I am not at that level of profit only about 4K but as I am not working I would like to keep the money i've put aside for tax purposes. Is this correct?

I am waiting on a tax refund after paying emergency tax on my redundancy settlement so would like this to settle first prior to raising the BTL profit issue as this would over complicate the situation.

Does anybody know how long HMRC should take to process a tax refund?

getmore4less

If these(reduncany and some BTL profit) were in the same tax year you should be treating them together forthe tax refund for the year.

What have you been doing with the BTL profit upto now?

for this year it will just be a normal return.

remember if you are claiming JSA that is taxable.

antrobus

MoneySavingMission wrote: »

....
Does anybody know how long HMRC should take to process a tax refund?

Have you submitted your 2012-2013 SA return yet?

MoneySavingMission

I am not claiming any benefits like JSA.
I have only entered a profit on BTL which is actually a false profit as I don't have the excess money it is simply that I can't offset the capital component of mortgage against my annual accounts. Previous years BTLs have been in loss and declared via an accountant.
I have asked HMRC to review tax position based on overpaying tax on redundancy settlement. Once this is returned, i will complete BTL accounts to end March 2013 and submit seperately. Is this the best way?

MoneySavingMission

does anybody have a good number for the Tax Refunds centre in Liverpool? I preferably that doesn't involve 20 different options to get through to someone

nomunnofun

As it now beyond the end of the tax year I doubt that HMRC will assess the tax position of the redundancy payment only, particularly as there is other income (your buy to let income)to be declared for that year. Can you not complete the SA return to include all income - easily the quickest way to obtain any refund in this situation.

MoneySavingMission

I need to keep both issues seperately. My BTLs have only entered profit after previous losses.

nomunnofun

MoneySavingMission wrote: »

I need to keep both issues seperately. My BTLs have only entered profit after previous losses.

I am sorry but I do not believe that can be done. You are required to complete a self-assessment tax return for the year to 5th April 2013. In that you must declare all income i.e. BTL including losses brought forward and PAYE income. Your former employer has probably submitted end of year PAYE returns to HMRC by this stage which will have included the tax deducted from your redundancy payment. Your SA return must correspond to this.

I can only repeat - HMRC will not deal with any PAYE refund separately from your other income under SA.

This would be my advice based on my own knowledge but, ultimately, it is your decision.