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Follow on Google News | Tax Cut Makes Rent a Room Scheme Even More Attractive say Office AssistantsIf you rent out a spare room, whether to a lodger or to holiday or business travellers, there is good news in store.
Up until now, the scheme has allowed the people doing the renting to earn up to £4,250 a year tax free, or £2,125 if renting out jointly. This amount has been frozen since 1997. However, from 2016 this amount is set to rise to £7,500 and £3,250 respectively. The additional allowance is worth £1,300 a year to a higher rate taxpayer, and £650 a year to a basic rate taxpayer. Who Qualifies for the Rent a Room Scheme? As long as the property is your main residence and the room you are renting is furnished, you are permitted under the scheme to earn up to £144 per week in rent. If you are a tenant rather than a homeowner, then you will need to have a clause in your tenancy agreement allowing you to rent a room. According to Spareroom.co.uk it is estimated that in England there are 19 million empty bedrooms, many of which are in the homes of pensioners who find themselves unable to downsize. A lot of the other empty rooms belong to ‘empty nesters’ whose older children have flown the nest. What you Need to Know About Tax Essex bookkeepers Office Assistants (http://www.officeassistants.org) explain that if you are earning less from renting a room than the threshold of the scheme - £7,500 per year from 2016 – then you don’t need to do anything as your exemption from tax will be automatic. However, if you are earning more than the threshold, then you will need to complete a tax return. In doing so, you can either choose to opt in to the Rent a Room scheme, in which case you will need to state this on your tax return so you can claim your tax-free allowance, or you can decide not to opt in, in which case you just set down your income and associated expenses using the property pages of the tax return. Of course, your local bookkeepers will be a mine of information and advice on the subject, so why not seek out their help? Office Assistants offers bookkeeping services and much more to clients throughout the south east of England from their base in Rainham, Essex. For more information visit http://www.officeassistants.org. End
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