If you don't already complete a tax return (and assuming you don’t meet other criteria), you will need to do so if you your income from property is higher than:
- £10,000 before deducting allowable expenses; or
- £2,500 after deducting allowable expenses
You don’t meet either of the above rules; however, you must still inform HM Revenue & Customs about any new sources of income or changes to your income if:
- You pay tax through PAYE on employment/ pension income and your other taxable income changes or becomes liable to higher rate tax; or
- You don’t pay tax through PAYE and your total taxable income is more than the personal allowance you’re entitled to
Clearly, you meet the first rule and therefore you must inform HMRC of the rental income. They will then decide if you need a tax return. As you pay your tax via PAYE, they may be able to collect any additional tax due through your tax code though, which will cut down on the administrative burden.
If you would like to discuss this further or would like someone to handle this for you, please feel free to contact your local TaxAssist Accountant.
By Jo Nockels
Disclaimer: Advice shared in this blog 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 forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.