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TaxRobin
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Experience:  International tax
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I have a two-bedroom terraced house in England– my home and

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I have a two-bedroom terraced house in England– my home and only residence - which also has a living room.
I sleep in one of the bedrooms . lets call it room A, and have for a few years taken in a lodger who occupies the other bedroom, lets call it room B. None of the rooms have been converted into separate flats.
I am also self-employed in another type of business and have claimed “office” expenses for the bedroom I use, claiming a third of my gas/electricity/water/council tax bills as deductible expenses.
The rent I have always charged is £350 per month, ie £4,200 per annum. As this falls below the threshold of £4,250 per annum for the rent-a-room scheme I have never declared this income to the tax man.
However, I am considering charging more than the threshold to bring it more in line with market rates.
My question is , can I still claim for relief under the rent-a-room scheme for income from room B if I am using another room, room A, as an office.
If I can do so, can I still make a claim for office expenses such as gas and electric for room A to be tax deductible.
I would like to calculate the tax I owe under what is known as method B, ie receipts minus the £4,250 exemption limit, as I don’t want to claim any expenses associated with renting out the room, which are minimal.
But I understand there is a time limit within which I must tell the taxman if I want method B to apply, which is five days less than 22 months from the end of the tax year, ie 31st January.
Does this mean I have to give the taxman advance notice of when I intend to increase my rental income over the £4,250 threshold? Or can I do it and just declare it when I complete my self-assessment.
Finally, I am a sole trader but trade under a company name. Does this affect my position in any way with regards ***** ***** rent-a-room scheme?
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
If your gross receipts from letting a furnished room, or rooms, in your own home are more than £4250, you can choose between
1 Declaring the excess over £4250, without deducting any expenses. The excess figure should be included in boxes 6.1 and 6.3
Or
2 Declaring the excess of rents over expenses. Total rents should be included in box 6.1, expenses in box 6.2, profit in box 6.3
You report the method when you complete self assessment. The election has to be in writing to an officer of HMRC. No special form is required. Making the appropriate entries on the return using one or other method will suffice.
Your trading would not effect the rent a room as long as the accommodation is in your home and not rented to someone to use as an office. In other words, the fact that you are using part of your home for an office is fine but the rent must be to someone for their living in and not to just use as an office.
Customer: replied 2 years ago.

Hi

Many, many thanks for responding promptly and as clearly as you have.

Just to confirm, am I correct in saying that I can continue to claim for office expenses such as gas and electric for room A whilst getting an income from another room,room B.

And am I correct in taking it that my trading under a company name does not affect my position with regards ***** ***** rent-a-room scheme.

You refer to boxes 6.1, 6.2 and 6.3. Are these boxes in the property pages which I understand I would need to complete as part of my self-assessment?

Expert:  TaxRobin replied 2 years ago.
Hi Andrew,
Yes you can continue with your separate expenses for the use of the other room.
Your trading under another name does not effect your residence and the rent a room scheme.
Yes, those boxes are for the choices that relate to the 2 different methods. I suppose I should have explained that better.
Customer: replied 2 years ago.

Finally, just to clarify, I understand that as my rental income is not part of my self-employment, I would need to request from the taxman the Property Pages form which I would also need to complete in conjunction with the self-assessment form. Is this correct?

The boxes 6.1, 6.2 and 6.3 you refer to are in in the self-assessment form?

Expert:  TaxRobin replied 2 years ago.
Yes you need to declare the rent a room on your self assessment.
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 14420
Experience: International tax
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