Main residence 2nd income

[ASB]

My Accountant has confirmed that yes i can get tax relief on the rental as long as it is below the 4125k mark.

Great

Thats not quite the whole story. You can deal with the income in the following ways:-

1) Tick the box on your tax return that says "used rent a room scheme". Deduct 4125 from the rent. Put the rest of the rent (if any) in the other income box with a note (i.e. you get taxed on anything over 4125). If you do this you can claim none of the associated costs.

2) Fill out and submit the property pages (i.e. schedule A) of a tax return. In this way you are taxed on the actual profit. This may be beneficial if, e.g., the entire house is let as you will be able to claim mortgage interest against the rent. [Strictly if the entire house is let the rent a room scheme does not apply].

[aa2006]

Long answer: Not necessarily.

You can receive up to £4,125 per year of rental income tax free, under the Rent A Room scheme (see link), whether you are running it as a business or just renting a room in your home.

http://www.hmrc.gov.uk/worksheets/sa105notes.pdf

You do have to declare it (tick the Rent-a-room box on your tax return), but you don't pay tax. It gets more complicated if the total rental is more than £4,125, as you can offset certain types of expenses.

My Accountant has confirmed that yes i can get tax relief on the rental as long as it is below the 4125k mark.

Great

[aa2006]

Again, not necessarrily.

If its your room/house you are letting then you will have trouble arguing, but if it is the spare room then it doesnt matter that you are not there.
As long as you can show the tax man you live there/keep a room for yourself there then you can claim.

Otherwise you will have to pay up.

Brilliant, i will also confirm this will my accountant, just to back it up, it will be interesting to see what she says on the matter

Asif

[The Lone Gunman]

Again, not necessarrily.

If its your room/house you are letting then you will have trouble arguing, but if it is the spare room then it doesnt matter that you are not there.
As long as you can show the tax man you live there/keep a room for yourself there then you can claim.

Otherwise you will have to pay up.

[aa2006]

Long answer: Not necessarily.

You can receive up to £4,125 per year of rental income tax free, under the Rent A Room scheme (see link), whether you are running it as a business or just renting a room in your home.

http://www.hmrc.gov.uk/worksheets/sa105notes.pdf

You do have to declare it (tick the Rent-a-room box on your tax return), but you don't pay tax. It gets more complicated if the total rental is more than £4,125, as you can offset certain types of expenses.

Thanks for that. I have taken a look at the link and saw the following comment

"You cannot usually claim 'Rent a Room' relief when you go abroad
and let your home in your absence, or where you occupy
job-related accommodation and let your former home."

If i am working away from home during the week, this means i cant claim this tax relief doesnt it?

Asif

[XLMonkey]

Short answer: YES. It is your income so should go on your personal decleration. Do not put it through your company.

As a rented room you will probably get away with not declaring it as business premises, but if you start pushing the income through your business then you are leaving yourself wide open for that and CGT on the business part of your house should you sell.

Long answer: Not necessarily.

You can receive up to £4,125 per year of rental income tax free, under the Rent A Room scheme (see link), whether you are running it as a business or just renting a room in your home.

http://www.hmrc.gov.uk/worksheets/sa105notes.pdf

You do have to declare it (tick the Rent-a-room box on your tax return), but you don't pay tax. It gets more complicated if the total rental is more than £4,125, as you can offset certain types of expenses.

[aa2006]

Short answer: YES. It is your income so should go on your personal decleration. Do not put it through your company.

As a rented room you will probably get away with not declaring it as business premises, but if you start pushing the income through your business then you are leaving yourself wide open for that and CGT on the business part of your house should you sell.

Cheers, i'm a lot clear on that. I take it, this means i will be paying extra tax on this personal (non business) related income.

Just put it through to my accountants as well, see what they suggest as well

Asif

[The Lone Gunman]

Short answer: YES. It is your income so should go on your personal decleration. Do not put it through your company.

As a rented room you will probably get away with not declaring it as business premises, but if you start pushing the income through your business then you are leaving yourself wide open for that and CGT on the business part of your house should you sell.

[aa2006]

i dont know much myself, but would it not be better for you NOT to pass the rental income via your company. afterall i am sure the mortgage is not in your company's name

css_jay99

Thanks for the info

The rental income isnt being passed via the company, it is going into my personal account. Just wasnt sure if i was still liable for any extra tax. I.e. do i need to declare it in my personal tax return.

Asif

[css_jay99]

i dont know much myself, but would it not be better for you NOT to pass the rental income via your company. afterall i am sure the mortgage is not in your company's name

css_jay99

[aa2006]

Hi
I currently working away from my main residence at a client site. I claim back expenses as normal but what i wanted to know was if my main residence(companies registered address) is getting another income via rent, i.e. i am renting out a room do i have to pay futher taxes on this income. And does this count towards my income

Thanks in advance