Adjusted Net Income and Rent-a-Room

If I rent a room in my home for £500/mo, thus falling within the £7,500 Rent-a-Room allowance, would I need to include that rental income in the calculation of my Adjusted Net Income, for purposes of reducing my Personal Allowance above £100,000? Also, what would be the situation if I was charging £800/mo and thus exceeding the Rent-a-Room allowance?

Hi alfo926,
If you are below the threshold then it's non taxable and you do not need to include.
if you went above the £7500 threshold then you would need to include the taxable profit. 
Thank you. 

Thank you for your reply. Just so I can be entirely clear on my reporting obligations: 1. If the total I receive is £7,500 or less I do not need to declare the income at all to HMRC, and it does not form part of my adjusted net income. 2. If the total I receive is greater than £7,500 I must declare the full amount to HMRC, and the full amount is included in my adjusted net income. Is my understanding correct?

As a follow-up, when you say "taxable profit" do you just mean the amount above £7,500? In which case the amount included in my adjusted net income is the total income MINUS the £7,500 allowance?

Hi,

Yes, that would be correct.

The taxable profit would be your net income.

If you are using the exemption amount £7500 to calculate your taxable income then yes it would be the gross income minus the exemption amount.

Rent a room in your home

Thank you.

A question related to this: during the current tax year I started hosting foreign students for short periods (my total income from it will be well below £7,500). As I already complete a tax return every year, do I need to opt into the Rent a Room Scheme, or simply "ignore" the income and complete my return as in previous years?

Hi
You need to include it on the return but specify by ticking the box on the rental section that you are claiming rent a room relief.