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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 7027
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I have a little annex in my house that I rent out on Airbnb

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Hi there. I have a little annex in my house that I rent out on Airbnb and at the same time I'm self employed. I'm putting my rental income and other income in the same tax return as if it was everything under the same business. If I want to claim the rent a room scheme, should I separate it from the main business? I use some of that income to fund my freelance work as well. Does the rent a room relief adds to the personal allowance or is part of it? I hope I'm clear, I know it sounds a bit confusing. Thanks very much in advance. Paula
JA: Are you filing as a sole proprietor or independent contractor?
Customer: propietor
JA: Anything else you want the Accountant to know before I connect you?
Customer: No that I can think of right now

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

You should separate the activities and show rental income under income from property in UK. Within this section you can make use of rent a room scheme.

Under rent a room scheme, the tax exemption is automatic if you earn less than the threshold of £7,500. This means you don’t need to do anything.

More information on this is here

You may use income from rental to fund some of your freelance activity but these are two separate income streams and are reported separately on your tax return.

My aim is to give you a professional service. I hope this is helpful and answers your question.

Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.


Customer: replied 8 months ago.
Thanks for your reply. So this means the rent a room allowance is separate from the personal allowance?

Thank you for your reply.

Rent a room allowance is separate from personal allowance.

I hope this is helpful and answers your question.

If there are no more issues, I will appreciate if you would kindly rate my service by selecting the 5 stars at the top of the screen before you leave, to ensure I get credited for it by Just Answer today.

Customer: replied 8 months ago.
Now the issue with separating both incomes is that the expenses from my freelance business are higher than the income if I have to take the rental income off it. I usually fund almost all my freelance business with the rental income...what happens when expenses are higher than income when submitting a tax return?

Thank you for your reply..

When expenses exceed income you have made a loss and this loss is available for offset against other earned income in the same year or you carry forward loss and offset against income in future years.

More on losses can be found here

I hope this is helpfuland answers your question. and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
that was very helpful, thanks so much

I thank you for accepting my answer.

Best wishes.