BTL income file a tax return?

kerrick

If a BTL property is owned either by one spouse or jointly on the land registry, and they change from joint tenants to tenants in common via deed of trust so the income split means one spouse's share of rental income is below the annual personal tax free allowance, if they had no other income, do they need to file a self assessment tax return?

Jeremy535897

You need to complete a tax return if net rental income is £2,500 or more, or gross rental income is more than £10,000. See:
https://www.gov.uk/check-if-you-need-tax-return

Unless a Form 17 is completed, the rental income will be assessed 50:50 whatever the actual split. See:
https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/SpecPersTax_iForms/1.0/17&template=17.xdp

kerrick

Thank you Jeremy that is very helpful!

A bit of a surprise that HMRC want people to file SA tax returns even if their total annual income is less than £12,570 (the tax free personal allowance). BTL income isn't ineligible for the annual tax free allowance is it? Why would HMRC want extra paperwork in the system if there's no tax to pay?

Jeremy535897

BTL income is taxable income, and the personal allowance applies to it just as it applies to other taxable income. But you have to file a tax return if you are self employed and you earn more than £1,000. These types of income fluctuate, so HMRC like to see an annual tax return.

Don't forget the Form 17. See https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9860