Rent a Room Scheme with a Partner - How does the tax calculated?

PinkFlower

I am not very clear on How Rent a room scheme Tax is calculated if you have a partner/married who shares your house. I wondered if you could help:

If you have a shared property ownership with your partner and you rent a room, how is the tax for rent a room calculated for the year ?

Assuming that Rent income is £10000 for the year 2015-2016
Tax free threshold is £4250
For each partner Tax free threshold is £2125
For each partner Rent Income is £5000 (half of the total income for the household)

One partner doesn't earn high enough to pay any tax.
The other partner pays 40% tax on Salary.

Then is it correct to say that high earning partner will pay 40% tax on £5000 income - £2125 = £2875 @ 40% = £1150

I would be grateful if anybody can share any light on this ? Thank you in advance for your time.

booksurr

PinkFlower wrote: »

Then is it correct to say that high earning partner will pay 40% tax on £5000 income - £2125 = £2875 @ 40% = £1150

correct

you both own the property, and as you imply you are married, then it counts as the main residence for both of you since tax law treats married couples as one "unit" in this context, so the allowance is split 50/50. Additionally, you have chosen to use the RAR pay tax on the excess above your respective allowances option, so....

if one partner is still below the income tax personal allowance of 10,600 for 15/16 tax year (including that £2,875 of taxable income in their total income for that year) then yes they will pay no tax. Whereas the other partner will pay at 40% given you say they are a HR taxpayer.

There is no alternative, since both partners are deemed to be legally entitled to the income it must be split between them

PinkFlower

Thank you very much for taking time to respond and comment. Very helpful.