Rent a room scheme - self assessment return

energy1x

Hi all,

I had a lodger for the tax year of 18-19 and have just finished my self assessment of this on the HMRC website, using the £7500 rent a room scheme allowance.

The calculation shows I owe some money for the 18-19 year which I am more than happy to pay by 31st January 2020. However, despite the lodger no longer living with me now, HMRC seem to assume that I am continuing to have a lodger - I am being asked to pay the actual tax due for 18-19 plus a balancing charge towards 19-20.

But I will not have a lodger for 19-20, and I pay the majority of my tax through PAYE, I am not self employed!!! Is there any way to avoid the balancing charge??

I do not see how it is fair for me to stump up extra cash which has never been liable to HMRC so they can sit on it effectively for a while before returning it, because I have not got any liability for the current tax year! Is it worth calling them?

dingling68

Under self assessment HMRC assume your level of income will be the same the following year, hence the payments on account.

You can request these be reduced / postponed in full when you complete your return if you are sure the income won't arise again by 5/4/20.

If you do end up owing tax for 2019/20, interest and surcharges may apply if you do not make any payments on account.

Hope that helps

00ec25

energy1x wrote: »

I do not see how it is fair for me to stump up extra cash which has never been liable to HMRC so they can sit on it effectively for a while before returning it, because I have not got any liability for the current tax year! Is it worth calling them?

instead of ranting about how unfair life is given you must have a tax bill of >£1,000 in order to generate a POA, why not just find out what to do ?

https://www.gov.uk/understand-self-assessment-bill/payments-on-account
Reduce your payments on account
If you know your tax bill is going to be lower than last year, you can ask HM Revenue and Customs (HMRC) to reduce your payments on account. You can do this either online or by post.

https://www.gov.uk/government/publications/self-assessment-claim-to-reduce-payments-on-account-sa303

00ec25

BTW are you sure you filled out the tax return correctly?
To have a tax bill > £1,000 caused by rental income, your gross rent must have been at least 12,500 to generate taxable income of £5,000 after deducting RaR (or 10,000 and 2,500 if a higher rate taxpayer)

That was a rich lodger !

phill99

00ec25 wrote: »

BTW are you sure you filled out the tax return correctly?
To have a tax bill > £1,000 caused by rental income, your gross rent must have been at least 12,500 to generate taxable income of £5,000 after deducting RaR (or 10,000 and 2,500 if a higher rate taxpayer)

That was a rich lodger !

TBH it's not uncommon in London to have a homeowner letting out 2 rooms at £600 plus a month. That gives you nearly £15k a year!!!