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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5113
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

I understand that the tax free allowance

This answer was rated:

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.

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

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. and other Tax Specialists are ready to help you
I thank you for accepting my answer.

Best wishes.
Customer: replied 2 years ago.

Thank you very much.