Reluctant landlords - do we need to self assess tax return?

Dazed_and_C0nfused

macman said:

Why 'reluctant landlord'? No one compelled you to rent the property.

It's a common phrase for those who didn't set out to let a property but ended up doing so through circumstances.

Although as you say it's still a choice 😃

igiveupjeez

We weren't landlords. Complicated family situations happened. Things developed and we became landlords. We want success for all family members so a low rent that was good for all parties was agreed upon. Luckily below HMRC thresholds.

Jeremy535897

Note the specific rules for uncommercial lets:
https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

"Uncommercial lets

You can only get relief for losses when the loss arises from commercial letting. If you let out a property on terms that are not commercial, such as to a friend or a relative for a reduced rent, expenses incurred can only be deducted up to the amount of the rent received for that property.

This means you do not make a profit or a loss.

You cannot use any excess expenses in a later tax year, even if after you start charging commercial rent in that tax year. Find an example of an uncommercial let."

macman

£400 a month is presumably way below market rent in this instance? Unless this is a room in an HMO?

Boat_to_Bolivia

Jeremy535897 said:

Your post is not clear. If you make a profit of £1 after deducting allowable costs (whether actual costs or the £1,000 property allowance, not both), and your personal allowances are used elsewhere, you need to pay tax on that £1. You don't necessarily need to complete a self assessment tax return though, if the net rent is under £2,500, or the gross rent is under £10,000.

Oh well seems I've been doing a SA unnecessarily for 6 years then. It didn't stop HMRC doing 2 compliance checks for net and gross rent well under the figures you quoted!

HMRC chasing after, and distressing the honest little fishes, rather than the large sharks who avoid/get with away with not paying hundreds of thousands in tax! Isn't it fabulous!

Jeremy535897

It is always easier to catch the minnows. People with modest (under £2,500 net) but taxable rental income who are in employment often avoid completing a self assessment tax return by having the rent coded out, as I mentioned earlier. If the net rent varies regularly, though, which it will if you get an annual boiler service and/or insurance, there is always some adjustment, and it is often easier to complete a tax return every year.

When making tax digital arrives in April 2024, landlords with gross rent of £10,000 or more will be obliged to register for MTD and maintain digital records of their rental income.

Boat_to_Bolivia

Jeremy535897 said:

It is always easier to catch the minnows. People with modest (under £2,500 net) but taxable rental income who are in employment often avoid completing a self assessment tax return by having the rent coded out, as I mentioned earlier. If the net rent varies regularly, though, which it will if you get an annual boiler service and/or insurance, there is always some adjustment, and it is often easier to complete a tax return every year.

When making tax digital arrives in April 2024, landlords with gross rent of £10,000 or more will be obliged to register for MTD and maintain digital records of their rental income.

Tell me about it...the hours and days I've wasted accounting for a few hundred quid, when I didn't and never would owe any tax...unbelievable the amount they must have spent chasing someone who owes nothing!

J_B

macman said:

£400 a month is presumably way below market rent in this instance? Unless this is a room in an HMO?

There is a real world outside London you know .....