Rent a Room Scheme & Property Allowance on ONE Property

financialmadness

Hi there,
I am currently finalising my self-assessment tax returns. My situation is that I have two rooms that I rent out in my one property (which I also live in).

For one room, I receive income from my current lodger. The room is situated in the main dwelling of the property and myself and the lodger share the same facilities (i.e. kitchen, bathroom etc). I understand the income I receive from this is eligible under the Rent a Room Relief Scheme. 

The other room is listed on Airbnb and I receive income from visiting guests. The room is a standalone annexe in my property, with its own personal bathroom and the facilities are not shared.
I understand the income I receive from this is not eligible for the rent-a-room scheme. But is eligible under the Property Allowance.

I understand the tax rules that a Rent a Room and Property Allowance can be claimed from two separate properties. But I wanted to get clarification if I am able to claim on both, when one of the rooms is an annexe. Is someone able to confirm?

Many Thanks

Jeremy535897

The restriction on claiming property allowance if you are eligible for rent a room relief is here (ITTOIA 2005):

783BMExclusion from relief: expenses deducted against rent-a-room receipts

(1)No relief under this Chapter is given to an individual for a tax year if—

(a)the individual qualifies for rent-a-room relief for the tax year,

(b)the individual has rent-a-room receipts for the tax year which would, apart from Chapter 1 of Part 7 (rent-a-room relief), be brought into account in calculating the profits of a property business, and

(c)condition A or B is met.

(2)Condition A is that—

(a)the individual's total rent-a-room amount for the tax year does not exceed the individual's limit for the tax year (see section 783BQ), and

(b)an election by the individual under section 799 has effect to disapply full rent-a-room relief for the tax year.

(3)Condition B is that—

(a)the individual's total rent-a-room amount for the tax year exceeds the individual's limit for the tax year, and

(b)no election by the individual under section 800 has effect to apply the alternative method of calculating profits for the tax year.

:Relief under "this Chapter" is the property allowance.

As you have observed, these rules do not stop claiming rent a room relief on one income stream, and property allowance on a separate income stream. See:

https://www.taxinsider.co.uk/rental-income-tax-free-ta

I have seen it suggested that claiming both reliefs applies if the two income streams are on different properties ( https://kb.taxcalc.com/index.php?View=entry&EntryID=2999 ), but the legislation above does not appear to require this. I suspect it is an assumption that separate income streams will mean separate properties, which will normally be the case.

financialmadness

Thanks for the above. 
I am of the opinion that I can claim both as the legislation doesn't strictly say I cannot. I guess for confidence, I would like it confirmed, before filling out my self-assessment. 

I spoke to HMRC yesterday and even they were not sure. I have been advised an expert will get back to me by Tuesday to confirm.

Jeremy535897

financialmadness said:

Thanks for the above. 
I am of the opinion that I can claim both as the legislation doesn't strictly say I cannot. I guess for confidence, I would like it confirmed, before filling out my self-assessment. 

I spoke to HMRC yesterday and even they were not sure. I have been advised an expert will get back to me by Tuesday to confirm.

Good luck with that. You can get the most egregious nonsense from HMRC "experts."

Grumpy_chap

financialmadness said:

Thanks for the above. 
I am of the opinion that I can claim both as the legislation doesn't strictly say I cannot. I guess for confidence, I would like it confirmed, before filling out my self-assessment. 

To get it confirmed and the confidence you seek may mean you need to engage the paid services of an Accountant to review and give you a statement (perhaps similar to the assessment that Jeremy gave).  The Accountant will only provide this statement if they are 100% sure that it will not give rise to a claim against their PI cover.

financialmadness

Just in case anyone has the same question. I did receive a call from HMRC and they said as the Airbnb is a separate dwelling from the main house and facilities are not shared. I am able to claim Property Allowance against this, while still claiming Rent a Room for my Lodger who actually lives with us.

[Deleted User]

financialmadness said:

Just in case anyone has the same question. I did receive a call from HMRC and they said as the Airbnb is a separate dwelling from the main house and facilities are not shared. I am able to claim Property Allowance against this, while still claiming Rent a Room for my Lodger who actually lives with us.

Which would be entirely correct but is not the situation in which the opening poster finds themselves. 

sheramber

[Deleted User] said:

financialmadness said:

Just in case anyone has the same question. I did receive a call from HMRC and they said as the Airbnb is a separate dwelling from the main house and facilities are not shared. I am able to claim Property Allowance against this, while still claiming Rent a Room for my Lodger who actually lives with us.

Which would be entirely correct but is not the situation in which the opening poster finds themselves. 

That quote is from the  opening poster who is in that position


The other room is listed on Airbnb and I receive income from visiting guests. The room is a standalone annexe in my property, with its own personal bathroom and the facilities are not shared.

[Deleted User]

sheramber said:

[Deleted User] said:

financialmadness said:

Just in case anyone has the same question. I did receive a call from HMRC and they said as the Airbnb is a separate dwelling from the main house and facilities are not shared. I am able to claim Property Allowance against this, while still claiming Rent a Room for my Lodger who actually lives with us.

Which would be entirely correct but is not the situation in which the opening poster finds themselves. 

That quote is from the  opening poster who is in that position


The other room is listed on Airbnb and I receive income from visiting guests. The room is a standalone annexe in my property, with its own personal bathroom and the facilities are not shared.

My apologies to the opening poster. I did notice but, apparently, I have to wait a while before I can edit or delete posts.