Self assessment: £1000 or not?

[boyse7en]

I'm doing my self assessment and I'm getting a bit confused with the figure and whether or not I quippy for the "under £1000 income is ignored" rule.

I'm a basic rate taxpayer, earning well under the limit.

I've got some rental income from a share in a property. Normal buy-to-let, nothing complicated.

My gross income from the rent is £2100
My share of building insurance and repairs was £50
My share of the mortgage was £1150

So my net income from the rental property is £900

Do I tick the "income less than £1000 from property" (ie the nett figure) or do I put in that income was £2100? If I do the latter it says I owe £200 in income tax, but I'm not sure that is right.

Ca anyone with half a financial brain help out? I'm bogged down in a world of HMRC videos and Help Forms that don't seem to answer the question.

[MaxFromage]

HMRC are referring to income not profit with reference to the £1K. Therefore you have to put in your income as £2,100 and then include the costs as well. Presumably the mortgage costs are interest and not repayment as well? £900 profit should result in £180 tax at basic rate.

[david mcc]

Your income will be £2100 but you will also be able to deduct £1000 off this (Property Allowance) instead of the costs of repairs etc which will be far less.

You will then be taxed on the £1100 income which is left.

[boyse7en]

david mcc said:

Your income will be £2100 but you will also be able to deduct £1000 off this (Property Allowance) instead of the costs of repairs etc which will be far less.

You will then be taxed on the £1100 income which is left.

Thats what I thought, but it doesn't add up

£2100 - £1000 allowance= £1100
£1100 x 20% tax rate = £220

£900 interest x 20% mortgage interest tax credit= £180

So that would leave me £40 tax to pay....

Only it doesn't 🤔

[Countdown]

On the "view my calculation" page it should tell you what "profit" it thinks you're making from the property and what tax it's charging on it.

[Eric Mc]

Property allowance


Per HMRC

The property allowance is a tax exemption of up to £1,000 a year for individuals with income from land or property.

If you own a property jointly with others, you’re each eligible for the £1,000 allowance against your share of the gross rental income.

If your annual gross property income is £1,000 or less, you will not need to tell HMRC, unless you cannot use the allowances. If it’s higher, you’ll need to declare your property income.

You cannot deduct more than the amount of your income and create a loss.

You must tell HMRC if you have:

gross property income over £1,000 up to £2,500 - contact HMRC
property income over £2,500 - register for Self Assessment
If you have two businesses and claim the property allowance in one business you may not claim actual expenses in respect of the other business.

You cannot use this allowance on income from letting a room in your own home under the Rent a Room Scheme.

[Countdown]

boyse7en said:

Thats what I thought, but it doesn't add up

£2100 - £1000 allowance= £1100
£1100 x 20% tax rate = £220

£900 interest x 20% mortgage interest tax credit= £180

So that would leave me £40 tax to pay....

Only it doesn't ??

I stand to be corrected but I don't believe you can claim the £1k allowance as well as interest tax relief. AIUI you either claim the £1,000 allowance OR the actual costs incurred

[boyse7en]

Countdown said:

I stand to be corrected but I don't believe you can claim the £1k allowance as well as interest tax relief. AIUI you either claim the £1,000 allowance OR the actual costs incurred

Ah, right. That's annoying, but does make the sums add up