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STS A Word on Rental Income A Word on Rental Income

If you are lucky enough to own a property (maybe because your parents have decided this is a cheaper alternative than paying your rent), then you may decide to rent some of the rooms to colleagues to help ends meet. You need to declare any rental income you receive to the Inland Revenue on your Tax Return form.

The rental income is taxed in accordance with amounts receivable in each tax year. You may deduct genuine expenses against the rental income such property repairs, water rates, utility bills, buildings insurance etc. If the property is furnished, then there may be an additional relief called “wear and tear allowance” available. If you also live in the property then you will need to apportion the expenses between the lettings and your private use before you claim any deduction against your rental income. This can be fiddly and time consuming.

The alternative is to use the Inland Revenue “Rent a Room Scheme”. Under the scheme you may deduct an allowance against the rental income instead of claiming the individual rental expenses. The allowance for the tax year 2006/2007 is £4,250.

A couple of points to note when using the scheme

You (as the landlord) and tenant must be sharing your home.
   
The allowance is per property, not per tenant.

If you believe the rental income provisions apply to you and you need further help, then please contact us on the Help, I’m a student form, and we will guide you in the right direction.

STS A Word on Rental Income

 

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