Rent A Room Scheme

[MikeWW]

Under the Rent a Room Scheme someone can rent out a room in their own home to someone (for residential purposes) and obtain up to (I think) £4250 in the year tax free.

I have seen a terraced house for sale which is still legally one property, but the first floor has been made into a self-contained unit, and the ground floor has also been made into another self-contained unit.

If I lived in one "unit" (one floor of the house), and I rented out the other floor at no more than the rent-a-room threshold, would Inland Revenue still consider this as coming under rent-a-room and therefore tax free?

Or would they consider it as being a rental property?

[accountant@uktaxshop]

Mike,

The answer here will depend on your precise circumstances.

The relief is intended for letting part of your house, not self contained units. However if the division is only "temporary" you may be able to claim RAR.

The definition of "temporary" is not black and white. It goes into things such as the structural permanence, the length of time separated, whether utilities are shared, whether you can sell just one of the flats etc.

However there are a number of reliefsÂ’s you can claim on a normal rental property, such as mortgage interest, see the "one minute guides" to your right for a full description.

Should you need some further help with this, please let me know.

Regards

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436