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Posted Mon, 24 Jan 2022 12:45:35 GMT by Shaz58
Hi- we are completing a Self Assessment Tax Return for the first time and we are struggling with the a couple of questions/points. Re - Details of UK Property. Q6 - Property income allowance. Figures shown below are 50%of Total (my husband and I own a property we rent out 50/50 so we are each doing a SATR.) Rental Income £4170 Total Property Expenses £867 I was going to leave box 06 Property Income allowance blank - would that be correct? My other query - Mortgate interest.- ATM it is showing £3303 as taxable profit for the year (each) After that figure on the form - question 43 (residential property finance costs )we have inserted £232 each (for mortgage interest). Does this automatically get included as expenses as I understand you can still get 20%tax relief from this -but I cannot see where /how this tax relief is calculated. I hope someone can help us. Thanks
Posted Tue, 25 Jan 2022 12:08:53 GMT by HMRC Admin 19

Please refer to the following link in respect of claiming the property income allowance:

Tax-free allowances on property and trading income

If your total expenses are more than £1000 then it will be more beneficial for you to claim the actual expenses incurred instead of the Property Income Allowance.

In respect of the residential finance costs you would still enter the figure of £232 in Box 43.

As of the 2020-21 tax year you will no longer deduct your finance costs from your profits as an expense but you will instead receive a basic rate tax deduction in respect of the finance costs incurred. This will automatically be shown in your tax calculation for the year.  

Thank you.
Posted Tue, 25 Jan 2022 18:33:30 GMT by Shaz58
Sorry, I am still confused. The link refers to Property Income. As stated above our rental income is £4170 each and our expenses are £867 each. Would it be more beneficial to us to each put the figure of £867 in box 06 Property Income allowance and then delete the individual expenses (in the other boxes labeled Property Repairs, Legal and Management and Rent, Rates and insurances) that add up to £867? re the Mortgage interest cost of £232 each - so does the HMRC automatically calculate the tax relief due on this and add it to the Figure showing as Taxable Profit For The Year - in our case this is showing as £3303each on the page (or 2) earlier on the self assessment form? Thanks
Posted Wed, 26 Jan 2022 15:12:58 GMT by HMRC Admin 26
Hi there,

You either claim the property income allowance of £1000 or the expenses of £867.

The mortage interest relief is given after tax is calculated on your net profit and will be given as a Basic Rate reduction to the tax liability which the online return will automatically work this out for you. 

Thank you.
Posted Wed, 26 Jan 2022 18:08:29 GMT by Shaz58
OK so it would be slightly more beneficial if I put £1000 in Box 06 (Property Income Allowance) and delete the individual expenses in boxes labeled Property Repairs, Legal and Management and rent Rates and Insurance ....that add up to £867? Am I correct in thinking that? Thanks in anticipation
Posted Thu, 27 Jan 2022 12:48:03 GMT by HMRC Admin 20
Hi Shaz58,

Thank you for your question while I cannot advise you what is more beneficial to you as HMRC cannot be seen to be giving financial advice.
I would advise that you cannot claim both expenses and the £1000 Property Income Allowance and for these purposes residential finance costs are considered as part of your expenses so you cannot claim both the £1000 Property Income Allowance and at the same time claim residential finance costs.

Thank you.
Posted Fri, 28 Jan 2022 13:29:32 GMT by Shaz58
Thanks, sorry one more question. As mentioned above my husband and I own the property 50/50 so we are each filling in the Self Assessment form separately. The figures given above for rental income of £4170 and expenses of £867 are each our own shares - 50%. Regarding your response above - am I correct in assuming we can BOTH put £1000 in box 06 Property Income allowance if we delete the boxes showing the individual expenses of £867 each? I know we are not talking very much money here but I want to fill the form in correctly. Thanks
Posted Tue, 01 Feb 2022 10:26:51 GMT by HMRC Admin 19

It is your choice whether you claim actual expenses or the property allowance.

If you own the property jointly then you are both eligible for the £1000 allowance. You can see more informayion here:

Tax-free allowances on property and trading income

Thank you.
Posted Mon, 20 Jun 2022 08:06:56 GMT by Jonathan Munck
Hi, are you able to declare mortgage interest as a landlord and claim the associated tax credit as well as claiming the £1000 property allowance? Having entered the £1000 allowance I see an error when declaring interest in box 43 stating I can't do both. I'm curious though as I interpreted your first reply as that I could possibly do both. Also, I co-own the property 50/50 with my wife - if I was to enter expenses and/or mortgage interest, should I enter the whole amount or my 50% share of these? Thanks
Posted Tue, 21 Jun 2022 13:15:38 GMT by HMRC Admin 10
Hi Jonathan Munck
You cannot claim both.
You will claim whichever is more beneficial for you.
For jointly owned property, you should only declare your share of income and expenses.
Further guidance is available at:
Work out your rental income when you let property

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