Personal allowance with rental income

modified123

Hi

based on my latest February payslip I have made the below assumptions. 

Employment income= £89K
rental income from property= £32K

 

Salary + Rental Income - Personal Allowance
= £121,000 - £12,570
= £108,430 taxable income

my question is can I use my full personal allowance of £12,570 as my salary is less than £100K. 

Thanks for your time in advance. 

Regards 

Dazed_and_C0nfused

modified123 said:

Hi

based on my latest February payslip I have made the below assumptions. 

Employment income= £89K
rental income from property= £32K

 

Salary + Rental Income - Personal Allowance
= £121,000 - £12,570
= £108,430 taxable income

my question is can I use my full personal allowance of £12,570 as my salary is less than £100K. 

Thanks for your time in advance. 

Regards 

No, based on what you have posted you will likely lose all of your Personal Allowance once your March pay is factored in.

Unless you have some large pension contributions or Gift Aid donations to take into account.

The above assumes that rental income is referring to the taxable profit and salary is what will be shown on your P60.

modified123

Dazed_and_C0nfused said:

modified123 said:

Hi

based on my latest February payslip I have made the below assumptions. 

Employment income= £89K
rental income from property= £32K

 

Salary + Rental Income - Personal Allowance
= £121,000 - £12,570
= £108,430 taxable income

my question is can I use my full personal allowance of £12,570 as my salary is less than £100K. 

Thanks for your time in advance. 

Regards 

No, based on what you have posted you will likely lose all of your Personal Allowance once your March pay is factored in.

Unless you have some large pension contributions or Gift Aid donations to take into account.

The above assumes that rental income is referring to the taxable profit and salary is what will be shown on your P60.

Thanks for the response. Apologies, I might not mention this. The employment income does include March salary. I know my basic salary which I have added to my February payslip, which make the total employment income to £89K. 

I will be making a big pension contribution to reduce the tax. my question was can I still use my full personal allowance if my salary is less than £100K (it’s £89K in my case) and rental income is £32k. 

Dazed_and_C0nfused

modified123 said:

Dazed_and_C0nfused said:

modified123 said:

Hi

based on my latest February payslip I have made the below assumptions. 

Employment income= £89K
rental income from property= £32K

 

Salary + Rental Income - Personal Allowance
= £121,000 - £12,570
= £108,430 taxable income

my question is can I use my full personal allowance of £12,570 as my salary is less than £100K. 

Thanks for your time in advance. 

Regards 

No, based on what you have posted you will likely lose all of your Personal Allowance once your March pay is factored in.

Unless you have some large pension contributions or Gift Aid donations to take into account.

The above assumes that rental income is referring to the taxable profit and salary is what will be shown on your P60.

Thanks for the response. Apologies, I might not mention this. The employment income does include March salary. I know my basic salary which I have added to my February payslip, which make the total employment income to £89K. 

I will be making a big pension contribution to reduce the tax. my question was can I still use my full personal allowance if my salary is less than £100K (it’s £89K in my case) and rental income is £32k. 

It isn't your income which determines the amount of your Personal Allowance, it's adjusted net income.

Which for most people is the total of all taxable income (including any income taxed at 0%) less any Gift Aid donations and relief at source pension contributions.

So without knowing your ANI it's impossible to know what your Personal Allowance will be.

Nomunnofun1

modified123 said:

Dazed_and_C0nfused said:

modified123 said:

Hi

based on my latest February payslip I have made the below assumptions. 

Employment income= £89K
rental income from property= £32K

 

Salary + Rental Income - Personal Allowance
= £121,000 - £12,570
= £108,430 taxable income

my question is can I use my full personal allowance of £12,570 as my salary is less than £100K. 

Thanks for your time in advance. 

Regards 

No, based on what you have posted you will likely lose all of your Personal Allowance once your March pay is factored in.

Unless you have some large pension contributions or Gift Aid donations to take into account.

The above assumes that rental income is referring to the taxable profit and salary is what will be shown on your P60.

Thanks for the response. Apologies, I might not mention this. The employment income does include March salary. I know my basic salary which I have added to my February payslip, which make the total employment income to £89K. 

I will be making a big pension contribution to reduce the tax. my question was can I still use my full personal allowance if my salary is less than £100K (it’s £89K in my case) and rental income is £32k. 

If it’s the case that you are querying whether you retain your personal allowance because your SALARY is below £100K (ignoring other sources of income) the answer is No! 

As Dazed stated you include all of your income to determine your ANI 

modified123

Understood, thanks for explaining the adjusted net income. I wasn’t aware of this. Looks like I need to make a huge pension contribution in order to reduce tax. Thanks again guys

Dazed_and_C0nfused

modified123 said:

Understood, thanks for explaining the adjusted net income. I wasn’t aware of this. Looks like I need to make a huge pension contribution in order to reduce tax. Thanks again guys

Once you are in tapered Personal Allowance territory then pension contributions are extremely tax efficient.

Which assuming your rental "income" is the profit figure you clearly are.

For example £8k paid to a personal pension or SIPP (a relief at source contribution) becomes £10k in the pension fund with the basic rate relief added.

That reduces your ANI by £10k, which can give you back £5k of Personal Allowance

And your basic rate band is increased by £10k.

Very tax efficient if you get the figures right.

Grumpy_chap

The OP may well benefit from the professional services of an Accountant to ensure they are declaring all income plus expenses correctly and paying the correct tax and not paying tax unnecessarily.