Tax relief on renting a room is to be reviewed

by Property 118

10:28 AM, 10th March 2017
About 2 years ago

Tax relief on renting a room is to be reviewed

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Tax relief on renting a room is to be reviewed

Hidden in the spring 2017 Budget small print indicates that tax relief on renting a room of your main residence will be reviewed by Government. This is likely due to the widespread use of Airbnb and the potential for generating tax revenue from this popular market.rent a room

The Government said it will conduct a consultation looking at the way Rent A Room tax relief operates to ensure it is better targeted to support longer term lettings, reflecting its original purpose.

Current Rent A Room rules allow home owners to earn an income from renting rooms to lodgers without paying tax on the first £7,500. This includes renting through Airbnb and other sites.

There are no timescales set yet for this review (we suspect they will have their hands full with NIC increases first), but RLA research indicates more than 23,000 rooms are listed with Airbnb in London alone.



Comments

terry sullivan

11:07 AM, 10th March 2017
About 2 years ago

another tax rise in the offing?

Whiteskifreak Surrey

11:12 AM, 10th March 2017
About 2 years ago

We have been renting for years to either students / postgraduates (on 6-12 months assignments) or longish terms (3-4 years).
If that going to be taxed we will have to increase the rent really dramatically.
IF they tacke AirB&B only, I can understand that to a certain extent, but if they start taxing people like us it would be another idiotic regulation in the midst of the greatest housing crisis in recent years.
Time to sell up and move out of this country.

Kathy Evans

13:20 PM, 10th March 2017
About 2 years ago

Well, I've never thought it fair that people can take in lodgers without paying any tax on the rent received

Whiteskifreak Surrey

14:10 PM, 10th March 2017
About 2 years ago

Reply to the comment left by "Kathy Evans" at "10/03/2017 - 13:20":

It is not without ANY tax. Whatever limit the Treasury set up is tax free, if anyone's yearly rent goes above - tax on that is payable.
I guess it was designed to help on one side someone who needs to stay somewhere and does not want to pay a lot, incl council tax, bills, repairs etc, - for a relatively short period. On the other side to help most often some pensioners who had a bigger house and supplemented their income.
It is incomparable to renting a property. You share kitchen, laundry facility, sometimes a bathroom. It is inconvenience for a living-in Landlord, as well as for a lodger. But is is cheap in comparison, everything is taken care of by LL and . a lodger can save a considerable amount of money.
It has been working - in general - for years.
In summer 2015 budget Gidiot raised that threshold from £4250 to £7,500. Nobody knows why (especially considering his urge to exterminate the PRS), there was a thread about it on this forum somewhere.
I would not be surprised if eventually that income will be taxed in full. Instead of £400 pcm the rent will be £700 pcm. Everyone will lose again.

Kathy Evans

14:30 PM, 10th March 2017
About 2 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "10/03/2017 - 14:10":

Of course, but 7,500 up here would get you a four-bedroom house. And the landlord doesn't get taxed on a proportion of the mortgage interest.

Whiteskifreak Surrey

14:43 PM, 10th March 2017
About 2 years ago

Reply to the comment left by "Kathy Evans" at "10/03/2017 - 14:30":

7,500 here is a 3-months rent for 4-bed here. Plus council tax. plus bills. Studio is 800 plus all bills and CT.

Why don't you write to Hammond and ask him to tax that as well? I am sure he will be grateful for that idea from a landlord...

James Barnes

16:49 PM, 10th March 2017
About 2 years ago

I don't know for sure but I would have thought with the shortage of housing, incentivising home owners to rent the spare room(s) through tax free allowances made perfect sense.
£7500 a year in most places will probably mean the first room if let out for the year wouldn't create a tax burden (outside of London anyway). To me increasing the tax allowance to say £12,000 would make sense (2 rooms at £500 per month), and might encourage more home owners to go down this route. No doubt there are literately tens of thousands of empty rooms that could be let and might be if people weren't worried about the tax.

Kathy Evans

17:55 PM, 10th March 2017
About 2 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "10/03/2017 - 14:43":

Just shows how different prices are across the country. I know plenty of people who rent out a room, and ask for a contribution to the gas and electric and internet, and even council tax - none of that ever gets onto a tax return, but then it wouldn't if it was received from a family member. I don't think it's worry about tax that stops people renting out rooms in their homes, but sharing with a stranger and insurance problems (as often it invalidates burglary insurance).


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