Hi
I am just having the same issue for my wife. We have been here three years and we have a shared, mortgaged property in the UK, and although I have always completed a tax return (because my situation is more complicated pensions/salaries etc) hers is pretty straight forwards. The only income she receives is on this property and she is below the threshold even without the allowable deductions. So until this year I would have agreed with both Pumpkin and Michael986 using the advice given here (http://www.hmrc.gov.uk/international/tax-return.htm)
But however a few days ago I stumbled across this wizard (https://www.gov.uk/check-if-you-need-a-tax-return)
and answering question 7 (You have lived or worked abroad check your residency status) it seems to imply that my wife (by virtue of simply living abroad) would need to complete a tax return, despite her total income being less than £10,000 and an income after allowances being less than £2,500. Therefore owing nothing and being owed nothing.
Can this be right? It implies that everyone who lives abroad HAS to complete a Tax Return. That can't be right, surely?