Rent a room scheme method B

pieroabcd

Hi,
I'm about to take in a lodger.
According to the Gov pages I can use the Rent a room scheme to pay tax only on the proceeds in excess of £7500, that is nice, but i need to tell HMRC that i want to use method B.

How can I tell this to HMRC? Is there a field in the self assessment or do I need to send a letter? In the latter case, where?

Thanks.

sheramber

pieroabcd said:

Hi,
I'm about to take in a lodger.
According to the Gov pages I can use the Rent a room scheme to pay tax only on the proceeds in excess of £7500, that is nice, but i need to tell HMRC that i want to use method B.

How can I tell this to HMRC? Is there a field in the self assessment or do I need to send a letter? In the latter case, where?

Thanks.

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

How it works

The tax exemption is automatic if you earn less than £7,500. This means you do not need to do anything.

If you earn more than this you must complete a tax return.

You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.

You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.

More information

Read the Rent a Room helpsheet for more detailed information on how to complete the form, and when it makes sense to opt out of the scheme.

pieroabcd

I've read that, but since the proceeds are likely to be more than 7500 I need to specify method B.... But how and where? This is not specified.

I *hope* that it's just a checkbox in the self assessment but I can't find this information.

k12479

If doing Self Assessment I believe you just use the property pages and put Gross Income in box 20, £7500 rent a room exemption amount in box 37, Net Income in box 38 (box 20 - 7500).

https://assets.publishing.service.gov.uk/media/6419c3758fa8f547c7ffd689/SA105_Notes_2023.pdf

mexican_dave

Yes, HMRC self-assessment is daunting the first time, but once used it turns out to be easy. You will have an idea of how much you will earn, so you will know how much tax to pay on any amount above the £7,500 threshold. I think you are overthinking this and panicking. As K12479 says answer the questions in the appropriate boxes on the form and HMRC will figure out your tax, hopefully very much as you will have estimated. No drama! Just remember to set aside the amount to cover your own tax estimate to cushion the tax bill!

pieroabcd

Thank you all