How do i put this right?

ACEJ_2

Thank you agrinnal. This info does make it clearer however:
I am not in work so i do not pay any tax via PAYE therefoer those £2500/£10000 thresholds would not apply.
Yet as my rental and interest income is my only income, for the years that my total income DOES NOT EXCEED my total allowances and reliefs, the second criteria also does not apply...therefore am I to understand that as NO TAX IS DUE that I do not have to do a tax return for these years????
I think this was also the question TheQuietMan was asking as his profit from property is less than £2500.

carmens0592

I do have the same situation. I tried to contact them but I guess it is necessary to go to their office for the clarification on things. Thank you for sharing some ideas as well.

TheQuietMan

Yes ACEJ that was what I was trying to find out. Should have made it clearer from the outset I suppose.
I'll try phoning in the morning before work and post an update if I manage to get through to them.

ACEJ_2

By the way quiet man, we have only just missed the deadline for declaring 2012/13 income so if we submit the form within the next 3 months its just £100 penalty. 2013/14 income does not need to be declared until Jan 2015. IF INDEED WE ARE REQUIRED TO DO A TAX RETURN AT ALL. Previous years would be dealt with under the Let Property disclosure scheme with penalties only seeming to relate to any tax owed...if no tax is owed is it penalty free. Can anyone else clarify if I have understood this correctly? Has anyone had experience of using ths Let property disclosure scheme??? Thanks for all your input folks, very helpful. apologies if I have gatecrashed your original query Quiet man!

TheQuietMan

No problem. It seems we are both looking for the same answers. From some of the threads I've read over the last couple of days it seems there are some great minds on here. Some of the advice given is truly amazing. Just wish I could get my head round some of the most basic of tax issues!!
Don't think I'm any clearer in my mind where I stand although it's reassuring to know I'm not alone.
Thanks to everyone who has taken the time to reply it's very much appreciated:beer:

00ec25

ACEJ wrote: »

IF INDEED WE ARE REQUIRED TO DO A TAX RETURN AT ALL. P!

let me restate this simply:
YOU MUST DECLARE ANY RENTAL INCOME NO MATTER HOW LITTLE IT IS (unless the rent is from a lodger and the total is less than the RAR limit )
you can make such a declaration by contacting HMRC, be that by phone or by letter.

Only where the rental income / net profit is above the thresholds stated are you compulsorily required to do a tax return.
Below those thresholds it is at HMRC's discretion as to whether they ask you to do a return or not, they may inform you that they will simply accept a letter setting out your figures or they may tell you to do a tax return. Where they tell you to do one and you don't then you will incur the penalties.
If you did not need to do a tax return but neither did you declare that you have untaxed income then you may at HMRC's discretion, face penalties. You will, in that case, face interest on any unpaid tax

TheQuietMan

Ok thanks for that 00ec25 that clears it up for me. Let's hope I catch them in a good mood when I declare all!! In your experience what is the general stance they take or is it simply down to the person dealing with your case?

00ec25

citricsquid wrote: »

As far as I understand it a lodger is a lodger whether or not they share basic facilities, the difference is in their rights (excluded occupier vs. occupier). The HMRC documentation makes no distinction, it only refers to a "lodger". Do you have a citation for occupiers not being covered under the rent a room scheme? This isn't my area of expertise so you're probably right but it would be helpful to have something concrete. Thanks!

as far as I'm concerned the info provided by the OP at the time I posted suggests the occupant is living in a self contained flat which does not meet the "temporary" nature of this:

http://www.hmrc.gov.uk/manuals/pimmanual/PIM4004.htm

given the Op has since explained further that the two flats share a meter and council tax I now think there is some ambiguity as to whether the occupant is a tenant or a lodger (ie as you correctly state an excluded occupier) however, if the council refers the matter to the VOA the council tax status may end up being challenged. Just because the OP may win the argument with HMRC over whether the division is "temporary" for rent a room purposes, this would not preclude the VOA from deciding that the property is two self contained flats for council tax purposes. The tests used by VOA are similar but their interpretation can be different - see various posts by Lincroft1710 (retired VOA) and CIS (current council tax staff)

If the OP is certain that they can argue that the arrangement is indeed a temporary separation of the property into 2 units then we return to the fact that the OP states the total rent received (before any deductions) is less than the rent a room allowance.

If that is so then the question of whether a rental declaration is required is null since rents under the RAR do not have to be declared where it is genuinely a lodger. Thus if that is the case the exposure to penalty and /or interest is negated

Obviously in the case where the property is jointly owned then the rental income is split between the 2 parties and the RAR limit is 2,125 per person and we return to the fact the respective individual must declare if their share is above that limit

masha

This should be of help :

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure

agrinnall

ACEJ wrote: »

Thank you agrinnal. This info does make it clearer however:
I am not in work so i do not pay any tax via PAYE therefoer those £2500/£10000 thresholds would not apply.

I think you read it incorrectly (although I had to read it twice to make sure). This amendment might make it clearer:

If you are an employee or a pensioner and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. Otherwise, you'll need to complete a tax return instead if the income you receive is:

....

So what that is saying is that you may be able to get any tax due collected through your tax code if you have earnings that are taxed through PAYE, but if you don't then you will definitely have to submit a tax return if any of the conditions following apply, in your case that income from property is £2500 or more.