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If the pre-expense deduction rental income is £10,000 or more or the net rental profit is £2,500 or more in a tax year, it needs to be disclosed in a self-assessment tax return as normal rental income. If you already complete tax returns in any event, then clearly you disclose it in any event. If the figures are lower than £10,000 and £2,500 and you have a PAYE source of income you can choose to have the tax on the rental profit collected through your tax coding but only if that source of income is sufficient to absorb the extra tax liability. No more than 50% of your pay can be deducted in tax and the tax deduction cannot be more than doubled by the addition of the rental income tax liability.
I hope this helps but let me know if you have any further questions.
Hi Tony, I was wondering where I can source the info : "If the pre-expense deduction rental income is £10,000 or more or the net rental profit is £2,500 or more in a tax year, it needs to be disclosed in a self-assessment tax return as normal rental income." It is not very obvious on the Property Pages or on .Gov.UK's wonderful website...
Am I interpreting that 'holiday lets' to friends not done on a commercial basis and merely as a contribution to costs £20/night would not be declarable in any event. Esp. as the total turnover was only £1700. Because once costs are deducted most likely there would be a false loss situation. Thanks, CAS
Look at the webpage here.
If a property is let at less than a commercial rent, then you can only claim expenses up to the level of the rent. Look here for more information on that. If it were me, I'd disclose the income in any event and show a nil profit after expenses if I incurred expenses in excess of the rent.