Advising of Rental Property Income

I started renting out a property a number of years ago, and due to the fall in interest rates have recently made a profit. In previous years I have always incurred losses. I havenít ever completed a tax return as I am in PAYE employment. How should I notify the HMRC of this additional income?

1st March 2010

If a taxpayer receives any taxable income in a tax year of which HM Revenue & Customs is unaware, then they have a legal duty to ďnotify of chargeabilityĒ to tax by 5 October following the end of the tax year in which the income was received.

The HMRC recently published guidance explaining that a lot of straightforward work can be dealt with over the phone to avoid the administrative burden of completing a tax return.

They explained that clients with net property income (that is income after expenses incurred) of £2,500 can use this facility, as they will make an adjustment through your PAYE code to recover the tax due. For more complicated matters they insist on receiving notification in writing. 

You mentioned that you made a loss on the property in previous years. Even though you have not been asked to fill out a tax return, you should still notify HMRC of any losses, as you can offset these losses now that you have made a profit from the rental business.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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