Hello all,
I have a retired friend who recently started renting out a property. He assures me that all his income will fall below the personal allowence level. Does he still need to register for SA?
Thanks in advance.
Torben
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Hi, he needs to inform the Revenue of this new source and if he receives a P2 Notice of Coding, then he can use the contact details therein.
Rental profits are difficult to forecast due to occupancy each tax year and changes in mortgage interest charged etc. Due to this, HMRC will probably require him to complete an SA and, it is wise to do a draft tax calculation each year, even if they withdraw the requirement. Loss years need to be monitored and carried forward.
Does your friend receive any savings interest? If so, this may be taxable at 0%, 10 or 20%, so he may be in a refund situation. Pensioners' tax free allowances are being frozen so keep an eye on future pension increases.
I agree with Tim, he need to register regardless of what he thinks. The SA takes into account so much more than just his rental, pension, investments, etc, etc the list goes on.
At the end of the day its better he claims this money, regardless of loss or profit, rather than being secretive and keeping it from HMRC.... We ALL know how funny they can get! :/ lol
I agree with the above...however remember that rental losses can only be offset against future rental income/expenses and cannot touch income from any other source (e.g occasional jobs etc).
He should inform HMRC of all his income on rents because when he looks into it properly he may find he has a number of expenses that may take him into a loss making situation for tax purposes. Despite this being unclaimable against his other income, it can then be claimed against his future income on rents. However if HMRC don't know about these losses then he won't be able to offset them in future!
