Tax code and property allowance - how does it work?

cautious_mum

Hello

Was delighted about 1K property allowance, made a decent difference on the tax my husband had to pay on the rental income we get (on our last self assessments). (joint own the flat, we split 50/50 and I applied the allowance as described by HMRC with no expenses taken off. Makes no difference to me as I earn very little and am not taxed, but made a difference in his case

HMRC said that there is no need for us to do self assessment (or at least my husband) as the small amount can be put on his tax code. (around 1.5K)

Now when they first said to do it (but do SA anyway for the first year) they put on the income less estimated expenses onto the tax code for him. Then I did the SA and it was adjusted when I put the accurate expenses in. (2016/17).

For 2017/18 I did the SA anyway as I hadn't worked out how to cancel it.. Asked for some advice and was told I didn't need to do it for next time. Then I found out about the allowance and did the SA using it. saved a nice few £'s

I have the full income figure and wanted to change his tax code before the end of this tax year In the hope I don't need to do a SA for him again. HMRC just put the estimated amount on his code each year and told him to adjust online each year.


Not sure what to do. The first time was before the new property allowance, now should I just put the full amount of rental income on (as you can't claim any expenses) but how do they know to apply the property allowance? I am nervous of only putting the income less the 1K .

Does this mean we are stuck doing SA anyway? I don't want them taxing him on the full amount. (how would we know if they did or didn't anyway?)
Is there any way of indicating that you want to have the property allowance applied?

I've searched for ages and couldn't find anything that explained.
He has looked at changing the amount of property income just now and it asks for net income after deductions. Does the property allowance count as a deduction. *confused*

Thanks

ProDave

Surely you will both need to do the SA? Can you guarantee the rental income will never change?

On a slightly related subject if you earn very little, I hoe you have transferred some of your tac allowance to your husband via the Marriage allowance?

cautious_mum

Yes I have been doing SA for myself every year too. (but it's really quick so I don't mind,) As I don't have a tax code I do it anyway. I was hoping that he doesn't need to do one as well..

HMRC said to just adjust the tax code before the end of the tax year with the correct amount then he doesn't need to do a SA.

His PAYE earnings have just tipped into the higher tax bracket for the last few years so I can't transfer any tax allowance, unfortunately :-(

cautious_mum

Well, I've ended up asking on Twitter (urgh! never thought I'd see the day when I had to sign up to Twitter to speak to HMRC!) and I can take the Property Allowance off my gross rental income and put that adjusted figure on the tax coding.
:-)