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HMRC internal manual

Business Income Manual

TMIA - Exclusions: Rent-a-Room Receipts

The rent-a-room scheme applies if individuals let a furnished room to a lodger, and the letting activity amounts to a trade – if the activity does not amount to a trade then the rental receipts will be considered property income.

 

Rent-a-room trades are not relevant trades for the purposes of the trade and property income allowances. However, individuals can opt for the rent-a-room scheme not to apply in some instances and to calculate profits by deducting expenses in the normal way.

 

If an individual also has relevant income from a relevant trade no relief is due on this relevant income for a tax year in two circumstances where the individual qualifies for rent-a-room relief. 

 

The first is where those receipts are below the rent-a-room relief limit given in s.789 ITTOIA 2005 and the individual makes an election under s.799 to dis-apply the full rent-a-room relief for the tax year.

 

The second is where the individual’s rent-a-room receipts exceed the rent-a-room relief limit given in s.789, and the individual chooses not to make an election for the alternative calculation of profits described in s.800 but instead opts to calculate profits by deducting expenses.

 

More information regarding the rent-a-room allowance can be found in the self-assessment help sheet HS223.