Personal tax return - Rent a Room Scheme

[richy]

The Rent a Room scheme : Directgov - Money, tax and benefits

Hi there

Got a question I hope someone else will have come across.

On my personal tax return I've got the choice of parking my lodger as "Rent a Room Scheme" -- 4,250 tax free, income tax charged on any sum above that.

or:
"Regular rental", rentalincome - expenses = gross profit.

the lodgings bring in 5000 per year. but I have £260 of bills each month that I would like to mark £130 down as lodgings expenses (50% of: tv licence, elec, gas, internet, council tax) -- is that allowed?

That would be £1560 expenses over the year.

gross profit: 2690

income tax on 2690 is 21% I think.. so that is: £564

The alternative is the Rent a Room Scheme, whereby only paying income tax on £750, so income tax due 157

-- therefore I plan to mark down as within Rent a Room Scheme! Is my understanding correct?

Cheers, rich

[Waldorf]

The tax would be 20%, 40% or 50% but in any case the taxable amount would be lower under the rent a room scheme than the full method.

I did this a few years ago, you need to declare the rental income of £5000 and then claim the £4250 on the tax form. It is quite easy I seem to remember.

[richy]

Great, thanks Waldorf!