self assessment tax for BLT

katiedog

Thank you everyone for taking the time to post, I was getting into a tiswas with this but you have cleared it up for me.

TheCyclingProgrammer

katiedog wrote: »

Thank you everyone for taking the time to post, I was getting into a tiswas with this but you have cleared it up for me.

One caveat: just because you don't legally have to do one, I have read things about it being worth doing if you want to declare a loss and carry it forward. Something to think about, certainly. Some people also feel more comfortable doing one because despite the legal position, HMRC take the view that all landlords should do one with only a few exceptions and feel that submitting a return even if no tax owed keeps HMRC off their backs.

You could of course ring HMRC and ask their opinion but I can guess what it would be.

AlexMac

A bit of a tangent, but...

HMRC wrote to me last year suggesting I STOP submitting self-assessments, which I've done for years, and , as my average annual taxable profit on two Bacon Lettuce and --- oops sorry, I mean BTLs, is only a few grand, that I pay an estimated sum in future via my tax code. I said thanks but no thanks, as frankly, I don't trust 'em to get my tax code right, whereas the self assessment online software seems foolproof in instantly calculating your tax liability...

And you only need about 5 lines of BTL income & expenditure detail (apart from your usual earned income data), so its a piece of cake

Kevie192

TheCyclingProgrammer wrote: »

Also note that while there is a mandatory fine for failing to file a tax return on time if you have had a notice to file, even if you owe no tax (this changed a few years ago), the maximum penalty for failing to notify HMRC that you are chargeable to tax remains capped at the amount of tax owed. So if you notify late but pay the tax on time there is no fine. And if you don't owe any tax, there is no penalty that HMRC can impose.

This is wrong. It used to be the case that the fine could not exceed the amount of tax payable. Now, the fine is the fine no matter what. Changed a couple of years ago.

TheCyclingProgrammer

Kevie192 wrote: »

This is wrong. It used to be the case that the fine could not exceed the amount of tax payable. Now, the fine is the fine no matter what. Changed a couple of years ago.

Nope. Read what I said again. The fine you are referring to is for failure to submit a self assessment on time. As I said, this changed a few years ago and can be applied even if you owe no tax. The penalty for failure to notify remains capped at the tax owed.

http://www.hmrc.gov.uk/manuals/chmanual/ch70100.htm

kdam

We are in the process of buying a BLT with cash. I now read that the HMRC will want a cut of the rent I am a non tax payer, not working with just a couple of low grade isa's does any of my £5,200 tax free allowance ( as if for savings ) go towards the tax on the rent i:e

income from rent £5000
deductable expenses 1000
to pay 4000

but if my allowance for savings is £5,200 and I have no taxable savings would this mean I won't be eligable for taxation on the rental property as I would be £1000 under my limit

Thanks

Pixie5740

Who is we?

Yes rental income is subject to taxation just like income from employment, self-employment and interest on savings, letting property is a business after all.

kinger101

kdam wrote: »

We are in the process of buying a BLT with cash. I now read that the HMRC will want a cut of the rent I am a non tax payer, not working with just a couple of low grade isa's does any of my £5,200 tax free allowance ( as if for savings ) go towards the tax on the rent i:e

income from rent £5000
deductable expenses 1000
to pay 4000

but if my allowance for savings is £5,200 and I have no taxable savings would this mean I won't be eligable for taxation on the rental property as I would be £1000 under my limit

Thanks

I'm not sure which year you live in, but the tax free personal allowance for the current financial year (ending 5 April 2015) is £10,000 for those 64 and under.

This applies to all forms of income (from employment, pensions, savings and investments).

If you have less than £10K of income (including most state benefits), you'll pay no income tax.

EDIT - Just realised you may have been referring to the cash ISA limit, which was recently £5.2K

ISA allowances cannot be used for rental income. You'll pay tax at your marginal rate.

fishpond

Pixie5740 wrote: »

Who is we?

Yes rental income is subject to taxation just like income from employment, self-employment and interest on savings, letting property is a business after all.

It is an investment, not a business.
Whether you run it as a business is up to you.

booksurr

kdam wrote: »

We are in the process of buying a BLT with cash. I now read that the HMRC will want a cut of the rent I am a non tax payer, not working with just a couple of low grade isa's does any of my £5,200 tax free allowance ( as if for savings ) go towards the tax on the rent i:e

income from rent £5000
deductable expenses 1000
to pay 4000

but if my allowance for savings is £5,200 and I have no taxable savings would this mean I won't be eligable for taxation on the rental property as I would be £1000 under my limit

Thanks

on your figures £4,000 pa is taxable net profit from rental income. If by "we" you mean the property will be owned by you and someone else them your share of the net profit is potentially taxable if your total taxable income (excluding tax exempt savings such as ISA) is more than the income tax allowance

the income tax allowance is £10,000.

I have no idea where you get £5,200 from, why don't you use google before you post as the income tax rules for savings interest are clearly explained on .gov.uk
https://www.gov.uk/apply-tax-free-interest-on-savings/10-savings-rate