Tax impact of switching mid-year from letting a room to letting out whole flat

Aitken67

Hello. I have a mortgaged two-bed flat. This tax year (17/18), I have been renting out a room to a lodger, income from which will be below the £7,500 rent-a-room threshold.
However, I am possibly about to go abroad for work, and so will need to let the whole flat. If I let the whole flat in March, i.e. in this tax year, would that then invalidate the rent-a-room exemption? That is, would I then need to pay tax (less expenses) on the income I've had this year from my lodger?
Any advice gratefully received! Thanks

laticsforlife

I don't think so. The reduction system only seems to apply if someone else rented (and presumably is to stop double-claims in the same year).

I think you get the full £7,500 relief on the lodger, and declare the other rent as normal on the new tenant (less expenses).

PIM4010 isn't very helpful in your example, which actually isn't that unusual, you'd think.

00ec25

laticsforlife wrote: »

I don't think so. The reduction system only seems to apply if someone else rented (and presumably is to stop double-claims in the same year).

I think you get the full £7,500 relief on the lodger, and declare the other rent as normal on the new tenant (less expenses).

PIM4010 isn't very helpful in your example, which actually isn't that unusual, you'd think.

the way I read OP's post is he moves out leaving his existing lodger in situ for the remainder of the tax year

as such PIM4010 directly addresses his scenario since RAR remains valid for the remainder of the basis period (my underlining)

Individual moves leaving lodger
This assists the qualifying individual with a lodger, who moves to a new home leaving the old home unsold and the lodger in occupation. Rent from the letting may, in these circumstances, continue to qualify for rent-a-room relief until the end of the basis period during which the qualifying individual moved.

If, after the individual moves, the lodger is allowed the use of the whole house (whether or not extra payment is involved) you can accept that:

the existing source continues, the basis period does not therefore end at the date of the extension of the occupation, the rent-a-room conditions are satisfied until the end of the basis period (but no longer).