Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Sun, 24 Jul 2022 23:16:57 GMT by Stephen Flavell
Hi, This question is about Self Assessment (SA100) and the rules governing carrying forward any unused allowance, 'expenses' and financial costs. Unfortunately I haven't found the answer to my questions and so would appreciate assistance. . This question relates to a UK tax payer (currently) owning a single property that they rent out. This rental income is this person's only income. . Please let me give an example: Rent received for the year: £12,000 Allowable Expenses : £1,200 Interest repayment on loan to buy the rented property (amount tapered to 20%): £1,400 . Because the rent received is below the allowance (£12,570) no tax is payable. My question is how much (if any) of the unused allowance (£12,570 - £12,000), unneeded Expenses (£1,200) and unneeded (20% of) Interest repayment (£1,400), can be carried forward to the next year's self assessment ? ('unneeded' meaning that because the calculated tax for the year was £0 there was no need to use allowable Expenses and Interest repayment to reduce it). Additionally, if anything can be carried forward, for how many years can this be done ? . If this person was to buy another property to rent out they would want to take advantage of the years of accumulated Expenses etc, if possible. . Thanks in advance.
Posted Mon, 25 Jul 2022 17:14:32 GMT by HMRC Admin 10
Thank you for your question.
The Income from property is calculated: Total rent less allowable expenses leaves net profit.
If the profit is less than the personal Allowance PA, currently 12570 then there is no tax to pay.
The expenses must be used in the year they occur you cannot carry over expenses toi the next year.
Posted Tue, 26 Jul 2022 11:09:47 GMT by Stephen Flavell
Thanks for your reply. Does 'expenses' in your reply cover the financial cost, specifically interest on the capital borrowed to purchase the property ? For example, if some of the financial cost is not needed (to get the money earned and liable for tax below £12570 one year) can it be used in later years ? Thanks
Posted Tue, 26 Jul 2022 13:52:37 GMT by HMRC Admin 10
Unused financial costs are carried forward separately from other expenses.
These should be declared at box 45.
More guidance is at
UK property notes

You must be signed in to post in this forum.