Self assessment tax return NEEDED ?????

433Barbara

New to this so apologies
but I could do with some advise / clarification please as been given conflicting information from accountant / bookkeeper / knowledgeable friend.
Hubby & me own a property (50/50).
He is a standard tax payer and I pay no tax (not currently unemployed).
Our property (only one) has a rental income of £6600 (before ANY expenses/allowances).
After our expenses our profit is below £5000.
This is where it gets murky as I've been told that as the profit is less than £2500 (divided joint income) then:
a) we do not have to declare,
b) we have to inform HMRC that it is below £2500,
c) we BOTH have to file a tax return showing loss,
d) hubby has to telephone HMRC to get his tax code changed.
Any help would be appreciated please .....
As I've said I have sought 'professional' help but they are giving conflicting info also
Thanks

xylophone

https://www.gov.uk/renting-out-a-property/paying-tax

Mahsroh

My advice (and I speak from bitter experience), just do a tax return. For the effort required in completing a tax return.... Just do it. Just declare to HRMC that you're earning money from a rental property, and complete a tax return, even if you're making a loss (which it doesn't sound like you are anyway)

433Barbara

Thanks Mahsroh. I do indeed have a loss of £3500 as the house needed extensive works but I will take your advice in completing a loss return.

433Barbara

xylophone wrote: »

https://www.gov.uk/renting-out-a-property/paying-tax

" Property you personally own
You must contact HMRC if your income from property rental is less than £2,500 a year.

But you must report it on a Self Assessment tax return if it’s:

£2,500 to £9,999 after allowable expenses"

I had read this but it still doesn't answer my question.

Pennywise

433Barbara wrote: »

I had read this but it still doesn't answer my question.

Income is gross before expenses. Profit/loss is net after expenses.

sheramber

433Barbara wrote: »

Thanks Mahsroh. I do indeed have a loss of £3500 as the house needed extensive works but I will take your advice in completing a loss return.

Have you checked that what you spent on the house is 'expenses' or is it capital expenditure which is not 'expenses'.

Did you do the work before letting out the property?

433Barbara

By way of update ..... I bit the bullet & called HMRC.

They advised that as the profit figure (after expenses) was not above £2500 then a Self Assessment was not needed.

Under £2500 comes under PAYE & all they need is a letter from myself & husband to say that we do not (& quote) 'meet the HMRC criteria for paying tax' and just to provide them with written confirmation of expenses.

Hope this helps someone

Mahsroh

433Barbara wrote: »

By way of update ..... I bit the bullet & called HMRC.

They advised that as the profit figure (after expenses) was not above £2500 then a Self Assessment was not needed.

Under £2500 comes under PAYE & all they need is a letter from myself & husband to say that we do not (& quote) 'meet the HMRC criteria for paying tax' and just to provide them with written confirmation of expenses.

Hope this helps someone

That's good then. Personally, I would opt to do one (if HMRC allow it) as it's pretty simple to do but for me completing a tax return gives me more visibility over my tax account. Plus if you are genuinely making a loss you can carry forward those losses to rental income in the following years when you do make a profit. I assume you can still do this under PAYE? I'm not familiar with doing it that way.


The only thing I will say though, is are you sure the £3500 is an allowable expense? Anything that's an "improvement" is capital expenditure and cant be claimed as an expense. Likewise, as sheramber said, if you've just bought the property, or are renting it out for the first time (sounds like this is the case) then any initial costs prior to the first tenancy can't be claimed.