All about the Rent a Room Relief

When renting a room in your own home, the tax implications of the rental income earned is something that most people ignore. The aim of this article is to outline few points related to your rental income. Where you let part of your home, HMRC calculates the taxable income for a year by deducting something called a fixed sum from the rent you receive. This deduction is called rent-a-room relief and currently stands at £4,250.

Where you own the property jointly this relief is halved i.e. £2,125. And where the relief is given you are not entitled to deduct other expenses related to renting the property, e.g. mortgage interest, repairs etc.

However, you can make the decision to elect for rent-a-room relief not to apply to income for a tax year. This means that instead you can claim the actual expenses you have incurred. An election would be worthwhile in the situation where your running costs (including loan or mortgage interest) for a year exceed the rent-a-room amount.  An election must be made by the second January 31 following the end of the tax year you wish it to apply for. For example, if you wanted the relief not to apply to 2012/13, you have until January 31 2015 to make the election. You can withdraw an election within the same time limit. A claim can be made as part of submitting your self-assessment tax return

For more information about rental income and how you can make a claim, contact KVS Accountants for advice. KVS Accountants act as accountants in South West London, South London and West London

 

Tags: , , , , , , , ,