Do I Still Need A Tax Return?

Q: Last year I completed my tax return but received a letter from my tax office stating that I do not need to complete a tax return in the future. However, I purchased a rental property during the 2009/10 tax year and have been renting this out for a small profit. Should I continue to file a tax return even though they have not issued me with one?

Richard, Newcastle

A: There is a requirement to notify the tax office by 5th October following any tax year where you owe further tax in addition to any tax that has already been deducted at source. As you have made a small profit from your rental income activities then you need to notify the HMRC. This gives them enough time establish if a tax return is required and to issue you with one to complete.

However, HM Revenue & Customs are trying to reduce the burden of Self Assessment on taxpayers who have straightforward affairs and have identified some areas where a tax return will still not required.

If your income from rents is less than £2,500 for the year and your other income is from employment where tax is deducted at source, you can just contact the tax office and they should be able to settle your additional tax liability through an adjustment in your PAYE code, and collect the underpaid tax through deductions in your wages each month. This will avoid the onerous task of completing a tax return to show this small amount of income.