Rental Tax

JayKAU

I am currently renting my property on Airbnb. We have 2 bedrooms for rent, to make managing them easier we have seperated the listings for each bedroom. Therefore, the rooms are seperately listed on 2 different accounts (My wife has one and so do I) which are managed separately with the money going into different accounts. How will we be taxed? I understand that any rental income below £4000 is not taxed. As the money is going into separate accounts will HMRC collectively tax us or individually tax us.

Dr_Teeth

Do you and your wife own the property jointly, or does one of you hold sole ownership?
Do you and your wife live in the home?
Are the bedrooms furnished?

TheCyclingProgrammer

What makes you think rental income under £4k isn't taxed? All income over your personal tax allowance is taxable. If you have a main job you've probably used your tax free allowance up so of course it will be taxed.

There are thresholds under which you do not need to register for self assessment as HMRC can collect the extra tax by reducing your tax code but the income still needs to be reported.

Edit: perhaps you are referring to the rent a room scheme? If so, apologies, looks like you are correct:

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

If you and your wife jointly own the property then you can split the income but you'll also only get half the allowance each, if I'm reading it correctly.

You can still claim the allowance if over the threshold but it's not automatic and you'll need to submit a self assessment.

This help sheet should have your answers:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323577/hs223.pdf

Spidernick

Is the OP thinking about 'rent a room relief' perhaps?

JayKAU

Dr Teeth, my sister, who doesn't live with us, and i are jointowners, my wife is not on the mortgage does that change anything. The rooms are furnished and only let to short stay guests, weve only started doing this.

TheCyclingProgrammer

If the property is jointly owned between you and your sister then I think by default rental income is split according to your share of the property, but you can agree to a different split.

See http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

Assuming your sister allows you to take 100% of the rental income, then I would think it would all be taxed as your income, even if the second room is on your wife's AirBnb account.

But you'll be entitled to the full rent a room allowance assuming you qualify for that scheme.

TheCyclingProgrammer

I guess it's worth pointing out that the rent a room scheme is optional - do make sure you will actually be better off using this scheme rather than the normal method of gross rental income less allowable expenses.

zygurat789

Copied from Rent-a-room on Direct gov

Eligibility


You can opt in to the scheme at any time if:

• you’re a resident landlord, whether or not you own your home
• you run a bed and breakfast or a guest house

So, perhaps your wife can participate in your tax exempt plans.

TheCyclingProgrammer

@zygurat789 - isn't the issue that as she isn't a co-owner, she isn't entitled to any share of the rental income, so whether or not she is eligible for the scheme is a bit of a moot point.

Not that it makes any difference if rental income is below the RAR allowance threshold - if OP and his wife were sharing the rental income 50/50, they would also have to split the RAR allowance 50/50 so the net result is the same as if OP receives 100% of the rental income and receives the full allowance.

booksurr

zygurat789 wrote: »

You can opt in to the scheme at any time if:

[*]you’re a resident landlord, whether or not you own your home

that differentiates between owner occupier and those who rent rather than own, in all cases the acid test is whether there is a legal interest in the property represented by ownership or a tenancy

in the case of a married couple where only one is the owner then the other person has no right to the income as there is no legal interest so cannot claim RAR

zygurat789

booksurr wrote: »

that differentiates between owner occupier and those who rent rather than own, in all cases the acid test is whether there is a legal interest in the property represented by ownership or a tenancy

in the case of a married couple where only one is the owner then the other person has no right to the income as there is no legal interest so cannot claim RAR

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