Rent a room scheme


M

mogga

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804



The Rent a Room scheme is an optional scheme that lets you receive a
certain amount of tax-free 'gross' income (receipts before expenses)
from renting furnished accommodation in your only or main home.


So what does that mean?
Say you earn 35k you could then earn £4,250 a year tax-free and it
doesn't affect the amount of tax you pay?

Does it count as income for benefits though?
 
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B

Bartc

mogga said:
The Rent a Room scheme is an optional scheme that lets you receive a
certain amount of tax-free 'gross' income (receipts before expenses)
from renting furnished accommodation in your only or main home.
So what does that mean?
Say you earn 35k you could then earn £4,250 a year tax-free and it
doesn't affect the amount of tax you pay?
Sounds difficult to believe, but yes, it's tax-free income. The only snag is
you can't claim expenses, such as extra heating and power, but these would
have to be more than 20% (or 40%) of your rental income to make a difference
(and in this case you can opt out of the scheme).

In some cases also you might lose 25% Council Tax discount, so this will
increase by 33%.
Does it count as income for benefits though?
I don't know about that. I suspect it will unless you keep your rental
arrangements 'informal'.
 
A

Andy Pandy

mogga said:
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804



The Rent a Room scheme is an optional scheme that lets you receive a
certain amount of tax-free 'gross' income (receipts before expenses)
from renting furnished accommodation in your only or main home.


So what does that mean?
Say you earn 35k you could then earn £4,250 a year tax-free and it
doesn't affect the amount of tax you pay?

Does it count as income for benefits though?
Probably - practically anything counts as income for benefits, even taking out a
loan!

It probably doesn't count for tax credits since TCs tend to use the same
definition of income as tax.
 
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M

mogga

Sounds difficult to believe, but yes, it's tax-free income. The only snag is
you can't claim expenses, such as extra heating and power, but these would
have to be more than 20% (or 40%) of your rental income to make a difference
(and in this case you can opt out of the scheme).

In some cases also you might lose 25% Council Tax discount, so this will
increase by 33%.


I don't know about that. I suspect it will unless you keep your rental
arrangements 'informal'.
hah itd all be tax free then eh :)
Ta
:)
 

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