Be tax efficient in your property business, either you are investing ,letting or refurbishing the property.There would be series of blogs relating to Property Business.Today we will talk about Rent a Room scheme option.
RENT A ROOM OPTION:
It allows you to earn up to £7,500/year tax free 2016-17 from letting out furnished accommodation in your home and is 50% if you are sharing property with your partner or else.
The tax exemption is automatic if you earn less than threshold and you don’t need to do anything.But you must complete tax return if you earn more than threshold.
You can opt into the scheme at any time if:
* You are a resident landlord
* You run a bed & breakfast or guest house.
You can’t use this scheme for homes converted to separate flats.
RENT & UTILITY EXPENSES:
You can charge the agreed rent from your tenant and can ask for deposit.
You can charge Council tax & Utility bills partial cost in the rental income.
However you are responsible for keeping the property safe and in good repair.
You can end letting at any time by giving short notice.
RESTRICTION TO USE RENT A ROOM SCHEME:
You can’t use the scheme if the accommodation is:
* not part of the main home when you let
* not furnished
* used as an office or for any business-it could be used if lodger is student or works in your home evening or week ends
* in your UK home and you live abroad
If your Gross Receipts are more than £7,500(or £3,750),you can choose Either to pay tax on your Actual Profit-your total receipts less any expenses & capital allowances OR you can pay tax on your Gross Receipts minus £7,500(or £3,750).You can’t deduct any expenses or capital gains allowances.
You can change between each method from year to year and you can decide which method is beneficial to you.Inform HMRC with in the time limit you want to make a change.
If you need further help,please don’t hesitate to contact us: Info@pyramidpointlimited.co.uk or www.pyramidpointlimited.co.uk/contact