Hello and welcome to the site. Thank you for your question.
HMRC guideline on who needs to complete a tax return is as follows:
If you are an employee and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. You'll need to complete a tax return instead if the income you receive is:
- £10,000 or more from taxed savings and investments
- £2,500 or more from untaxed savings and investments
- £10,000 or more from property (before deducting allowable expenses)
- £2,500 or more from property (after deducting allowable expenses)
In your case, as you think the property income is likely to generate a loss and not a profit then I would recommend my clients to file a tax return and report the loss on the tax return for it to be carried forward and offset against future profits.
If your income is less than £10,000 before deduction of allowable expenses or less than £2,500 after deduction of allowable expenses then you not required to file a tax return, instead you can write to the tax office and report the figures.
Allowable expenses -
Expenses incurred that are deemed repairs and maintenance are allowable expenses against rental income...e.g. repairs to the kitchen, bathroom, garden fence, windows or roof. Painting the house is also allowable expense against income.
On the otherhand, replacing of central heating system, replacement of roof and replacing old bathroom and kitchen with modern and new equipment is expenditure of a capital nature enhancing the value of the property and this is allowable against capital gain when the property is sold.
More information on 'Do you need to complete a tax return' can be found here
I hope this is helpful and answers your question.
If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.