Does Hmrc say I don’t have to Pay Tax on my Rental Property Profits?

My rental property makes a profit of £2,400 a year. I checked the HMRC website and it says I don’t have to complete a tax return. Does that mean I don’t have to pay tax on my property profits?

 

Although the HMRC website (www.hmrc.gov.uk/sa/need-tax-return.htm) says you don’t have to complete a tax return if your income from the property is less than £2,500, you should scroll down and read the text under ‘Things to check if you don’t need a tax return’. This makes it clear that you must tell the Tax Office about any new sources of income. The deadline for reporting new income is 5 October following the tax year in which the new income first arose. If this date passed some time ago you need to contact the Taxman as soon as possible and declare all your income and expenses relating to your let property. The Taxman may decide to charge you a penalty for failing to declare your income at the right time.

You do have to pay tax on your property profits, but if the amount owing is small compared to your salary, it may be deducted through your PAYE code. In this case, you don’t need to complete a tax return each year, but without an annual tax return, the Taxman will not know to vary your tax code if your rental profits increase or decrease.

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