What is rent a room relief?
Two methods to calculate the relief
This relief is based upon letting a room out in your main residence where you live.
There are 2 methods under which the income from letting this room can be assessed.
One of the two methods below can be chosen
If an individual lets a room, furnished, in their main residence – the gross rent up to £7,500 is exempt.
Alternative – rent a room relief calculation:
|Less: rent a room relief||(£7,500)|
This exemption may be ignored if under normal treatment (rental-allowable expenses) the tax payer is able to generate a lower assessable income, that is where the allowable expenses exceed £7,500.
|Less: rental allowable expenses||(x)|
|Wear and tear allowance||(x)|
The election for 2019/20 must be made by 31/01/2022 and stays in force until it is revoked.
Sunder rents a room in his main residence. Gross rents are £145 per week and expenses amount to £120 per year.
What is his property income assessable and when does the relevant election need to be made?
|Rent receivable 52 weeks * £145 =||£7,540|
Alternative – rent a room relief – calculation:
|Rent a room relief exemption||(£7,500)|
Sunder will decide to elect the rent a room relief exemption as this produces the lower property income assessable. He will have to make this election by 31/01/2022 for income receivable in 2019/20.