Some self assessment questions - Rounding errors and rebates.

[Landlady3]

I have filled in my self assessment form and have some queries.

The property made a loss this year. It will also make a loss next tax year as the property is now sold.

In the calculations section it ignores the losses and shows figures for my PAYE. Due to rounding errors the online system is saying I owe them just over a quid from my PAYE

Surely I should have a rebate as I have paid too much tax through PAYE rather than the system demanding more from me? I do not wish to offset a loss to next year as we will have another loss.

What am I doing wrong?

[jpkeates]

How did your property make a loss?

The tax is on income with specific costs being "allowed" against that income.

[theartfullodger]

Losses on property income are not usable againts profits/tax-paid on other income (eg Employment, pension, bank interest). However you can "carry forward" those losses (each year..) so that as & when you make a profit off property you can reduce tax paid (or property profits only).

Did you include all mortgage costs or just interest paid?? In these times of record-low interest rates it's hard-ish to make a loss - how'd it happen??

[Landlady3]

There was no mortgage so no interest.

The Tenants moved out half way through the year so it was refurbished to the standard it was before we rented it previously then it sat waiting for new tenants/or being sold neither of which happened until this tax year. It was also in an area where full council tax was payable.

Have you got a link to where it says that on HMRC I can't find it.

Any ideas on why I need to pay more though and how to resolve that. My PAYE P60 is right as it includes pence. The self assessment does not include pence hence it wanting me to pay more. I begrudge paying more than I should.

[theartfullodger]

In my experience with SA you bang in the exact numbers (e.g. £123.45) and if an expense HMRC round it up (to £124) and if income they round it down (£123). Try it, don't take my word.

Are you applying all refurb expenses against income tax rather than CGT?? There are at least 12 taxes a landlord can pay, it doesn't all have to go on income tax.

I take it the link you want is on carrying forward losses.. - see
http://www.hmrc.gov.uk/manuals/tctmanual/tctm04006.htm
& boxes 39, 41, 42 & 43 on SA105...
https://www.gov.uk/government/public...property-sa105

PS: When you state

I have filled in my self assessment form..

do you mean paper form?? I thought it had to be done online now, before 31/01/2015.

PPS I am not an accountant!

PPPS Buy & read this...
http://www.amazon.co.uk/How-Save-Pro.../dp/1907302859

[Landlady3]

Yes online. All refurbishment expenses have gone onto the form as property repairs and maintenance. We did not improve the property beyond what it was originally so it is my understanding it is not capital.

We have not CGT regardless of losses as it was our main residence for main years so get relief on it.

[Sad S]

Any loss incurred by your letting business can be offset against future profit on your letting business. If you have "closed down" the letting business you are not able to offset the loss against anything else.

Specifically, you may not offset the letting business loss against your income from employment, nor any income from investment or savings.

You can't understand the rounding applied to the pence (as stated in post #5) - but it always works in your favour. So income is rounded down, and allowable expenses are rounded up.

[mattl]

We have not CGT regardless of losses as it was our main residence for main years so get relief on it.

Remember that to get relief you must have notified HMRC of your main residency within 2 years of buying a second property, have you done this? If not then you will not be able to claim relief.

Also, the way this works is that for a certain period (I believe the last five years) relief is granted on when you kept this property as your main property, so normally your CGT burden only reduces, it never reduces to zero.