should tax be deduted if rent is less than personal allowance and no other income?

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    should tax be deduted if rent is less than personal allowance and no other income?

    My daughter who is a student of of a London univercity, rents a room there and has letting her property in Maidenhead to pay for room in London.
    The rent she receives in Maindenhead (£750 less 12% management fee) makes her annual income well below her personal tax allowance, and she has no other income.
    Yet her letting agent withholds income tax from every monthly rent, saying she will be able to claim this tax back when she will befiling her tax return for this year.

    Is it possible to arrange so that the tax is not witheld?

    #2
    Your daughter should notify HMRC of her new source of income.
    HMRC will either tell her she needs to complete an annual self assessment tax return or submit a less formal notification of her revenue each year.
    She can't just not do anything because her income is below the annual tax free allowance.

    As far as I know the letting agent shouldn't be deducting income tax at all, as that's only a requirement for non-resident landlords (i.e. people who pay UK tax but live abroad).
    My agent certainly doesn't.

    As there's not necessarily going to be an annual tax return, it seems odd that the agent is assuming there will be.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Agree with the above. Ask for the tax back now, and if refused start a Money Claim Online.

      Comment


        #4
        Agree with the above. On the face of it, agent would appear either to be thoroughly clueless or to have misunderstood residence status of LL.

        Deducting income tax is a requirement for agents acting on behalf of landlords whose usual place of abode is outside the UK, unless LL has obtained exemption from HMRC.

        https://www.gov.uk/government/upload...ts-tenants.pdf

        This seems to be what they are doing, but it does not apply to landlords whose usual place of abode is in the UK (which London, I believe, is).
        There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

        Comment


          #5
          Thank you very much for the detailed explanation.
          My daughter is absolutely not-streetwise and is up to her eyebrows in studying art, so I need to explain her in layman terms.
          Originally posted by jpkeates View Post
          Your daughter should notify HMRC of her new source of income.
          How this notification should be done? By filling in and posting some form or this can be done online?



          Originally posted by jpkeates View Post
          Your daughter should notify HMRC of her new source of income.
          HMRC will either tell her she needs to complete an annual self assessment tax return or submit a less formal notification of her revenue each year.
          As there's not necessarily going to be an annual tax return.
          Do you mean that tax return is not unavoidable?
          What might be a less formal notification of her revenue ?
          Is it what HMRC advise her after she notify them?

          Comment


            #6
            There's a good chance that they'll ask for a tax return, now they're mostly completed online, it's a bit of a no brainer for HMRC.
            However, it's not inevitable and people have been asked to simply write each year to confirm that they're receiving income and it's this much, so no tax is required.

            I'd suggest that your daughter calls up HMRC and asks.
            They're notoriously slow to answer, so make a cup of tea first and just keep waiting.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Originally posted by jpkeates View Post
              Your daughter should notify HMRC of her new source of income........

              She can't just not do anything because her income is below the annual tax free allowance...........
              From HMRC website:
              Do you need to complete a Tax Return?
              Most taxpayers in the UK are taxed at source and so do not need to complete a Self Assessment Tax Return. ‘Taxed at source’ means that the money you receive has already had tax taken off, such as the wages you get from your employer when paid under the Pay As You Earn (PAYE) system, or UK bank interest taxed at source.
              People who have income that has not been taxed at source, or not taxed at the correct rate, and on which tax is due, are required to inform HM Revenue & Customs about the income within six months of the end of the tax year in which the income is received (that is by 5 October following the end of the tax year). HMRC will then send you a notice to file a tax return, either by post or electronically.
              Such income would include, for example, rental income, self-employed income, savings income for higher rate taxpayers, and occasional untaxed income like eBay sales or casual freelance earnings.


              Seems to suggest that if tax is not due, notification is not required. Makes sense. HMRC want to know if tax is due.

              LA's Solicitors usually put any fees or money held temporarily in to a high interest account?

              pm
              Before acting on forum advice, you may wish to consult an expert, someone who has all the relevant facts, and who accepts liability for their advice.

              Comment

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