Raise the Roof – Are Shelter listening to landlords at long last?

Reply to the comment left by "Jeremy Smith" at "10/02/2014 - 14:27":

Good question, I don't know.

Sam Cowen should though 🙂

Where are you Sam?
.

As far as I'm aware there's no restriction on who can take advantage of the rent a room scheme. If you're already filling in a tax return, you may prefer to claim expenses on the rental in your home, or you can use the rent a room scheme. You don't need to fill in a tax return to take advantage of the scheme.

If I recall correctly, the main limitation on who can use it.
a) It must be a room in your own home.
b) You cannot claim any costs against income tax on your home if you use it.

I don’t know of any limitation on you renting out other properties in a normal way at the same time.

I have just discovered this,and it links to another thread, in respect of, is renting property a business or an investment:
This looks like an internal guidance note for HMRC:

"Letting in residence part of a wider source

Income from the only or main residence cannot be within rent-a-room if the taxpayer receives rent from other properties and, on the facts of the case, all rents constitute one source of income (an example would be a guest house business conducted partly in the taxpayer's main residence and partly in a separate property).

Where no trade is being conducted, the ‘source’ will usually be the letting agreement.

Do not make enquiries if the taxpayer presents computations to show the only or main residence as a separate source unless you have good reason to suppose that they are wrong. "

source: http://www.hmrc.gov.uk/manuals/pimmanual/PIM4012.htm

there is also a flow chart to go with it:
http://www.hmrc.gov.uk/manuals/pimmanual/PIM4060.htm
(then click the link)

But I'm not sure if it does apply or not, since it mentions "one source of income", eg a guest house.

Full details on the Rent a Room scheme are available to download here: http://www.spareroom.co.uk/content/info-landlords/rent-a-room-scheme/

Reply to the comment left by "Ian Ringrose" at "10/02/2014 - 14:53":

Ian,
I know you can use "Method A" or "Method B" for calculating tax.
..and you can deduct costs:
eg
Method A
Gross is, say £6,000, less costs of, say £5,000, you pay tax on £1,000.
or
Method B
Gross is, say £6,000, you deduct your allowance of £4,250, you pay tax on £1,750.

You have to elect if you wish to use Method A, if you are using the rent-a-room scheme and you do nothing, by default you are using the allowance method B.

Reply to the comment left by "Jeremy Smith" at "10/02/2014 - 15:10":

Jeremy Smith,

I **think** if the income is over the "rent a room" allowance you have to say if you are using the "rent-a-room scheme". Given that you will have to fill in a tax return and there is a tick box on the tax return, it would be hard not to make an election.

-> Do not make enquiries if the taxpayer presents computations to show the only or main residence as a separate source unless you have good reason to suppose that they are wrong.
-> Where no trade is being conducted, the ‘source’ will usually be the letting agreement.

If they meant that a landlord renting out other properties counted as the same source, I would expect them to give that as an example. Remember that being a normal landlord is not considered a trade, but running a B&B is.

Yes Ian,
I agree, if the amount is over the threshold, you have to declare 'rent-a-room' on your return to be able to pay the tax.

I suspect that rent-a-room is considered a different source to let properties.
Therefore, rent-a-room would be allowed for landlords.

....And therefore, I got the wrong information, AGAIN! from an accountant.

- It's no wonder I do my blinking tax return myself nowadays !!
(with mistakes the last two years that I let (sorry-paid!!) someone else to do it for me.)