Does a tax return need completing?

Rental profits>£2.5k but losses brought forward

Didn't find your answer?

I think the summary probably covers it, but if net rental profits of say £5000 are made, yet there is loss relief available from previous years of £4000, I appreciate tax must be paid on the remaining £1,000, but is there a requirement to submit a self assessment tax return, or is this covered by the "<£2.5k" exemption?

Thank you

Replies (5)

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By Tim Vane
04th Feb 2020 18:21

Well, you can ask HMRC if they'll make an assessment without the return but I think they'll almost certainly want a return, given that (presumably) there was one last year for the losses to be claimed.

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Replying to Tim Vane:
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By Susiepie
04th Feb 2020 18:58

No return was submitted in the year the loss was made either.
I should point out that I have only just met this person a couple of years down the line from this happening!
I believe they can still claim this loss relief even though it was not declared on a return? If HMRC want to enquire into it, having not seen the loss figures on a prior return that is up to them, but in the loss making your they did not meet the criteria to be REQUIRED to submit a self-assessment. It is whether they are obliged to complete a return for the subsequent year. The profits before any loss relief do exceed £2.5k, but afterwards they don't.
I personally think the easiest way is to just submit returns for both periods, albeit there may be a late notification issue, but I was questioning whether the client is actually obliged to do so.
Thanks for your input.

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RLI
By lionofludesch
04th Feb 2020 18:50

It's a return for me.

Probably quicker than sorting it without one.

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By Wanderer
04th Feb 2020 19:44

Separate from the '£2,500 profit exemption' HMRC apply a further criteria. Is the income before expenses £10,000 or more? If so then they require a return.
Of course none of this is the law!
Based on the information given I'd probably just do a return for the year when there is a profit and show the prior year loss as a brought forward loss.

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By Tax Dragon
05th Feb 2020 06:47

There was a ridiculous (and ridiculously long) thread in here in January in a similar note (pop "15/17" into Aweb's own search box and you'll find it straightaway).

In your case, you've said that there is tax to pay on the £1,000. So of course HMRC has to be notified. (And that's law, not just HMRC policy.)

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