How to use interest relief tax credits against additional income.

Hello I am a low earner and do not exceed my tax free allowance. My only income source is usually from property rentals, however this year (FY24) I also had some income from interest (circa £2000). When entering this in to my Self Assessment (SA) it is calculating I ow tax on this interest which it shouldn't. So I must be doing something wrong with my SA. Please see below my calculations. This year my income from property was £21,497 (rent - allowable expenses). My finance costs were £12,274 generating a tax credit of (12274*0.2) £2455. Tax due on my income £21,497 I calculate as: Remove tax free allowance: 21497 - 12570 = 8927. Tax due before credit: 8927 * 0.2 = 1785. Tax due after credit: 0 Tax credit remaining: 2455 - 1755 = 700. So if we just take my property income I should pay no tax this year and have a £700 credit to be used against any additional income. Which means I should be able to make an additional £3500 (700/0.2) before any tax is due, and I made only £2000. My questions is how do I enter my remaining tax credit in to my SA? There is a tax adjustment section but the descriptions do not match what I am trying to do. Any help is greatly appreciated. Kind regards, Nicholas

Hi Nicholas Jones,
We cannot comment on scenarios, only provide general information / guidance in this forum.
For an answer to a detailed question of this nature, you would need to contact our Self Assesment helpline  or seek professional advice.
Self Assessment: general enquiries
Thank you. 


 

NOT HMRC, tax acct, you cannot use the mortgage interest tax credit against other sources of income, the balance unused is carried forward to following years until used, and the other sources of income are liable to tax in the year