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Sam Tax Expert A lady of 85 years old has a rental profit from a rented property relating to the last 2-years. Her personal allowance for the year 2013-2014 is £10,000 approximately. The rental profit from the property is approximately is £4000.00 to £5000.00 1) If she draws state pension only and no pension credit, would it cause any affect in calculating her tax liability. As the income is still below the P/Allowance, which means she has not to pay any tax. 2) If she draws pension then we will have take in accoount the amount over the threshold and pay tax on it. Please clear the murky area in both the cases. With regards, ***** *****

Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Sunder
Thanks for your question and for asking for me.
1) Yes this could well do, although she may be entitled to the full age related allowances (as born before 06/04/1935) which would allow an income of £10660 to be paid tax free - of which the rental income and state pension together may be below hi figure, she still has a duty to fill in a self assessment tax return so that HMRC can establish hat she has no tax liability.
But you do not indicate what her state pension is per year, so I cannot comment whether this affects her tax liability.
And any rental income in excess of £2500 requires a self assessment completed - see link here
http://www.hmrc.gov.uk/manuals/sammanual/sam100050.htm
See under "Other circumstances" and the 6th entry down
2)Im not sure how posed question 2) differs from posed question 1)
but either way self assessment must e completed and any income that exceeds her personal allowance threshold, will see a tax liability arising.
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13699
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 2 years ago.

Dear *****,

In the second question, I meant to type Pension credit and in that question "credit" somehow got omitted. Any way, thank you very much. SAM 100050 does answer practically all the answers.

Yours sincerely,

Sunder

Mohan J Mitra

Expert:  Sam replied 2 years ago.
HI Mohan
You are very welcome
If you could take the time to rate the level of survive I have provided, it would be appreciated, as this ensures Just Answer credit me for my time
Thanks
Sam

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