PTP TR - why is the basic rate deduction for finance costs not appearing in the tax calculation
Article ID
kba-03621
Article Name
PTP TR - why is the basic rate deduction for finance costs not appearing in the tax calculation
Created Date
29th June 2018
Product
Problem
Why is the basic rate deduction for finance costs not appearing in the tax calculation?
Resolution
The deduction is worked out as 20% of the lower of:
1. The finance costs not deducted from rental income in the year
2. The property business profits
3. Total adjusted income i.e the income (after losses and reliefs, and excluding savings and dividend income) that exceeds the personal allowance
Please check the following if the deduction not appearing in the tax calculation:
1. Has an entry for residential finance costs been made in box 44 of the UK Property supplement, or box 41.1 or box 63.1 on the full Partnership supplement, or box 24.1 on the Foreign supplement
2. Has the property made a profit or a loss, only those with a profit will be eligible
3. Is the total adjusted income greater than zero after the deduction of savings and dividend income, the personal allowance and any other losses or reliefs
The calculation may be followed on the HMRC Tax Calculation summary notes (towards the end) https://www.gov.uk/government/publications/self-assessment-tax-calculation-summary-sa110
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