My wife and I have a buy-to-let property held jointly. My understanding is that the profit from rental of this property should be split 50/50 for the purposes of income tax. If the profit per person is less than £2500 does this mean it is not liable to income tax?
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1Where did you get the £2500 figure from? The government website on this (gov.uk/renting-out-a-property/paying-tax) says to contact HMRC if your income is less than that amount, but doesn't say it's exempt.– GS - Apologise to Monica ♦Sep 14, 2015 at 13:14
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No it isn't exempt and I would like to know where you got this information from.
If the rental profit (gross income less allowable expenses) is less than £2,500 a year, and the gross rental income (before deduction of expenses) is less than £10,000 a year, you can ask HMRC to collect any tax due through your PAYE code. You would need to send the tax office a statement of your rental income and expenses each year. HMRC would then change your PAYE tax code to collect the additional tax from your employment or pension.
answered Sep 14, 2015 at 15:22
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1This is a moderately common misunderstanding. Below £2500 in untaxed income (in any form) HMRC generally won't require you to do full on self-assessment, but they still require you to disclose and they absolutely will want any tax due. Sep 16, 2015 at 10:23