I have a query over unused costs brought forward on a SA property page.
Since the finance tax relief has been phased out over the past couple of years the set percentage of costs has been entered in the relevant boxes.
In the majority of the examples on the Gov website showing how to work the amount of relief out (20% of the lowest amount of finance costs, profit, or total income exceeding PA) it shows the lower amount as being the finance costs. So all the finance costs are used to calculate the relief and none would need to be carried forward.
In one example it shows property profit being the lowest, so that is used to work out the amount of relief given, and the difference between that and the finance costs is carried over to the following year to be added to the finance costs.
I've looked at the figures and finance costs are the lowest, however overall they are not exceeding the PA and wouldn't be paying tax anyway. This was the same last year, and the year before. Although the finance costs were the lowest, because they haven't actually benefitted from any relief does this make the amount "unused", and can the figure from last year's box 44 (residential finance costs not included in box 26) be put in box 45 as "unused residential finance costs brought forward"? If so I assume this would be the whole amount?
Circumstances may change in the future where the PA amount could be exceeded, in which case relief would be claimed.
Replies (5)
Please login or register to join the discussion.
It may be just me but am a little confused by your post.
You mention that the tax reducer is 20% of the lowest of finance costs, property profit and income exceeding the personal allowance and then state that finance costs are the lowest of the three in your case.
But the next paragraph then goes on to say that the income does not exceed the PA - which, if true, would make that figure the lowest of the three.
So, I guess my question is which one is true? Providing some numbers may help.
Glad it wasn't just me :).
If the income is less than the PA but finance costs have been paid, the tax reducer is then zero (as you say 20% of nothing is nothing) - but this means ALL the finance costs paid are carried forward as none have been given relief yet.
Your software should do this automatically if you put the numbers in.