rent-a-room allowance for part of the year

rent-a-room allowance for part of the year

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Dear All,

I am currently letting a property in the UK and have a slightly complicated situation which I'm struggling to resolve. I was living in the property for until the start of October 2013 and I had a lodger until 12th September 2013. From the 2nd October I have been on holiday (travelling) out of the country and have been letting the property as a whole to a new tenant who still occupies the property.

For the tax year 12-13 I used the rent-a-room scheme to account for income received from my lodger. For the tax year 13-14 the income from the lodging is less than £4,250; however, the income from 02/10/13-05/04/14 is considerably more than £4,250.

My question is - does the rent-a-room scheme apply in this case (especially considering I have been out of the country). If not, how do I apportion the allowable expenses, especially mortgage interest, considering I occupied the property for 6 months of the year?

My second question is - should I be accounting for the income on the date I received the cash, the date of the invoice, or over the period of rental (last year I used the date I received the cash from the lodger).

Many thanks in advance.

Replies (2)

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By Abacus Finch
26th Apr 2014 14:31

I could be wrong but in a nutshell...

I believe you must occupy the property as your main home for at least part of the period in each tax year to qualify for rent-a-room relief up to £4,250 gross rents for that tax year. If the rent exceeds £4,250 you have a choice to pay tax either on the excess over £4,250, or treat the whole thing as letting income setting off the usual appropriate expenses adjusted for any part private use. I would account for the rent when due.

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Replying to ireallyshouldknowthisbut:
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By iamrjindal
28th Apr 2014 08:24

Hi Abacus,

Thanks for your reply. I was living in the property whilst the lodger was there (i.e. for part of the year). I actually wrote off to HMRC as well and they claimed that I could claim income from the lodging under rent-a-room (it would then be completely tax free since below £4250). Income from the property rental would be treated separately and therefore I would need to complete the property letting pages in my tax return (using the net profit - income less expenses)

This does seem some what in my favour but I guess word from the horses mouth!

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