Rent a room scheme

I am trying to get my head around the rent a room scheme. I was wondering about this scenario: Charlies has property A where he lives with a lodger, and property B that he rents out to tenants (long-term) 1) Can Charlie claim RAR relief? Especially if expenses in both properties combined amounted to less than £7500? 2) If Charlie earns up to £7500 for property A and, for example, £8000 for property B can he declare only income from property B? Or does he need to declare both because of the joined income from the two properties? 3) HMRC doesn't ask for income and expenses for each separate property? It's all about combined income/expenses from both properties? Do these scenarios are at all affected when hosting a refugee under the Home for Ukraine scheme? Many thanks

Hi,

An individual can claim the property allowance or expenses for one property and Rent a Room relief for another rental property. You would need to make seperate entries on a Self Assessment tax return for each source of property income.

Any tax due in respect of the Rent a Room Scheme would be calculated seperately as per the guidance.

Rent a Room Scheme (Self Assessment helpsheet HS223)

There are no seperate rules in respect of income received under the Homes for Ukraine scheme. 

Thank you.

Hi there thank you for you answer. How do I create separate entries for each property? Even though I entered the optional information that I'm renting two properties in 'UK property' section, the rest of the form doesn't allow me to separate the two sources of property income. I only have 'Details for UK Property' section (which asks general questions. It's more 'tailoring the form') and then 'Details for other property income' where I'm asked about all income from properties. I've gone through the whole form a few times: I cannot find any place where I'd be able to enter income from each property. Neither can i find guidance how to declare income from each property in the guidelines .  

Name removed & email details removed admin 

Hi,

You will need to show the income from your Rent a Room scheme as well as from your other property in box 20 on page UKP2 of SA105.

You would then use the relevant boxes to claim any expenses in respect of the rental property and complete box 37 to claim the Rent a Room scheme exempt amount. 

Thank you.

Hi there, thanks for that. How should I fill it in if I'm using the online, not the paper form? The paper form does indeed include box 37 (https://assets.publishing.service.gov.uk/media/642ae3e3ddf8ad0013ac0c8b/SA105_2023.pdf): Rent a Room exempt amount Unfortunately, the online form does not have box 37 and has only the following options: Page 1 Details for other property income (as the UK property section has no questions about income) - Total rents and other income from property - Total rents and other income from property - UK tax taken off total rents... (applicable to non UK landlords) - premiums for the grant of a least - reverse premiums and inducements The page summarises the total UK property income Page 2 Expenses for other property income - rent, rates, insurance, ground rents etc. - property repairs and maintenance - non-residential property finance costs - legal, management and other professional fees - costs of services provided, including wages - other allowable property expenses The page summarises property expenses Page 3 Adjustment for other property income: - private use adjustment - balancing charges - annual investment allowance - the structure and buildings allowance - electric charge-point allowance -freeport structures and buildings allowance -zero-emission goods vehicle allowance - zero-emission car allowance - all other capital allowances - cost of replacing domestic items - for residential lettings only [BOX 37 ABOUT RAR MISSING] Page 4 Profits and losses for other property income - Loss brought forward used against this year's profits - loss set-off against 2022-23 total income - residential property finance costs - unused residential property finance costs brought forward Page 5 Any other information for other property income You can see that box 37 does not feature in the online form even when I ticked in 'Details for UK Property' that I would like to claim a Rent a room Relief. How should fill in the online form in this case? Many thanks, Jo

Hi,
When you complete your online return you will select ‘Yes’ to Rent a Room relief and then a further question will appear for you to confirm if the rent you receive is £7500 or less (or £3750 if let jointly).  
If this is the only letting income you have and it does not exceed the exemption you check the ‘Yes’ box and do not need to make any further entries on the UK property section.  
If your letting income exceeds the exemption then you check the ‘No’ box and then include the total rents received in the ‘total rents’ box on the next page. 
Thankyou.

Hi there You are suggesting that if someone receives more than £7500 (sole ownership) from a lodger (gross income) they need to tick 'no'. However, this is not what the HMRC guidelines says from what I understand. They say that if you earn up to £7500 you do not pay a tax. However, if you earn more than that you still might benefit from the scheme. Please, see: 'If your gross receipts from letting are not more than the Rent-a-Room limit of £7,500 (or £3,750), you do not pay tax on your profit. If they’re more than the limit, you may still be able to benefit under the Rent-a-Room Scheme.' (and then please see Method B listed on the page) (https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2023) I also wonder whether you could read the whole thread and address the situation when there are two properties? In my first post I clarify that there are two properties. Property A (I + lodger) and Property B (long-term tenants). I would like to get clarification for this year and future years for a few scenarios but for now let's narrow it down to just this one situation: Property A generates income of a bit more than £7500 (so it needs to reported). Let's say it's £7700. Property B generated income of, for example, £12000. The expenses for Property A are £3500 The expenses for Property B are £2100. OPTION A --> What you colleague was suggesting was that I should declare two separate properties. In this case it'd make sense to use RAR for property A. Income £7700, RAR relief of £7500, taxable income: £200. Property B couldn't use RAR and the taxable income would be £9900. So the taxable income all together for both properties would be £10100. However, I do not know how to declare two incomes as separate from two properties. Even when I enter that I have two properties there is no space to declare income from two different properties. Your colleague mentioned box 37 in the paper forms however this box doesn't exist in the online form. OPTION B --> Another option (the only currently available with the current functionality of the online form) is that I do not distinguish between two different property incomes (due to the inability of indicating this in the online form). In this case the total income is: £19500 and the total costs are: £5600. If I don't claim RAR the taxable income is: £13900. OPTION C --> However, in this situation can I claim RAR (considering my situation in Property A) instead of declaring the costs (which are lower than £7500?). In this scenario the taxable income would be 19500-7500 = 12000. The first option would be better for me because my taxable amount would be a bit lower however currently the online form does not allow to distinguish between incomes between different properties (lodger / long-term tenant) despite your colleauge's suggestion that the paper form and online forms are the same. So in option A suggested by your colleague: how can I declare two incomes from two different properties in an online not paper form? And can I follow option C if option A is not possible. Best wishes, Jo

Hi,
Based on the information provided, we assume you are referring to help sheet HS223 which outlines various scenarios.
Looking back at previous responses to your query,  we believe the recommendation to tick “no” would refer to if the level of income falls below £7,500, to which as indicated, would not be the case, so ticking “no” would be the correct action to take.
Using Option A, you would combine both rental profits together and insert it as one amount under total rents on the following page of the online tax return, as there is no functionality to declare profits as two separate incomes.
Thankyou.

Like Jo Thor, I too am trying to get my head around the Rent a Room scheme - although without the added complication of 2 properties. Never having needed to complete a Property section of the SAR before, it is unfamiliar territory. I have read the guidance, but still unsure. My question is simply how to complete an online self-assessment return in the following scenario: Total income received in the tax year from lodger is 10k GBP (say), in other words an amount above the 7.5k limit. Want to claim RAR relief of 7.5k so presume tax will be due on the excess of 10k minus 7.5k. So what boxes need 'ticking' or completing on the online Return in this case, please? Thank you.

Hi Taxpayr-Jo25,
When competing the Online Tax Return SA105 Property supplementary page, you should select “yes” to Rent a Room relief, then you should see a further question whether you received rent of £7,500 or less (£3750 if jointly owned), then you would click “no” in this case, followed by inserting your total rental income of £10,000 into the ‘total rents’ box.
Thank you. 

I think the help section on the online assessment is confusing as it refers to a box that does not exist in the online form. "If your RAR income was more than the exemption and you want to claim RAR relief, include your RAR income in the 'Total rents' box and the exempt amount £7,500, or £3,750, in the 'Rent a Room exempt amount' box" The 'Rent a Room exempt amount' box does not show up as far I can see.

Hi,
We apologise for any confusion caused, you can find the ‘rent a room exempt amount’ box under the section of your online tax return for ‘UK property income’, followed by ‘Change adjustments’, the page required is called- ‘Adjustments for other property income’, please scroll to the very bottom of this page, it is the last question.
Please note, this box will only appear when you choose ‘yes’ to ‘Do you want to claim Rent a Room relief’ and choose ‘no’ to ‘If ‘yes’, did you receive rents of £7,500 or less (or £3750 if let jointly)?
Thank you.

Question, I was unemployed all of 2023/2024 (no earnings income). And rented a room in my flat for circa £9,300 Is the difference (9,300-7,500 = 1,800) liable for tax? if so at what rate (I read tax is liable at one's marginal rate, but mine is zero as I did not earn monies above the personal allowance threshold). Finally do I need to file a Self-Assessment? Many thanks

Hi,
Yes, you need to complete a tax return to declare that you have rental income and that you are claiming rent a room relief. If you have no other taxable income, the balance will be covered by your personal allowances.
Thank you.