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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4984
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I understand that the tax free allowance

Resolved Question:

Hello. I understand that the tax free allowance for letting a room in my home will go up shortly. If I let the room for even more than this new rate, would I pay tax just on the difference or on the whole rental amount? Thank you.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

If you let the room for more than the rent a room limit, than you have a choice in how you wish your rental income to be taxed..

Choice 1
You can opt for the net income (gross rental less expenses) to be taxed

Choice 2
You pay tax on the gross receipts less the rent a room limit (to be increased to £7,500 from 6 Apr 2016) i.e.the difference, but you don't offset any expenses against the rental income.

You won't pay tax on the whole rental income.

More information on this can be found on HS223 here

https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-for-traders-2015

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.
Customer: replied 2 years ago.

Thank you very much.