Property allowance: contents: elections
No election needs to be made if an individual’s relevant property income for the year does not exceed the property allowance and they would like to use the Full Relief. If an individual is issued with a notice to file a self-assessment return for another reasons, they are not required to report the property income.
There are two circumstances where an individual will need to make an election through their self-assessment return:
Partial Relief: An individual may elect for Partial Relief to be given if their relevant property income for the tax year exceeds the property allowance. If this election is made, no deduction will be allowed for any expenses incurred in relation to the relevant property business. Individuals may choose to do this because the property allowance that year exceeds the individual’s allowable expenses in the year. See PIM4460 for details of how this interacts with the reduction for income tax where residential mortgage interest has been restricted under 272A ITTOIA 2005.
Loss Making: An individual who would otherwise qualify for Full Relief may elect not to be given Full Relief for a tax year by completing a tax return to report their income and expenses, following the guidance included in the SA Notes. This could be because the individual would like to calculate their taxable profits using the usual rules applicable under ITTOIA 2005 as they are loss making. See example at PIM4482.
Elections should be made on or before the first anniversary of the 31 January following the tax year for which the election is being made.
E.g. the deadline for an election for tax year 2017-18 is 31 January 2020.
HMRC expect customers to make claims and elections within statutory filing deadlines however, a claim or election may be included in a return that is delivered after the time limit for making the claim or election has passed.
Customers can make a return including elections under section 783BJ (for Full Relief not to be given), or 783BK (for Partial Relief to be given), to give themselves the benefit of the allowance within the general four year time limit for making claims.
More details regarding claims can be found in the Self-Assessment Claims Manual guidance at SACM10035.