Is Rental Income regarded as Earned Income?

vpsurf

Hi

I rent out one property (my house, while I live elsewhere). 

For Personal Savings Allowance and other tax-related purposes, will my rental income be regarded as "Earned Income" by HMRC?

Thanks in advance

DE_612183

not so much personal savings - but certainly income tax - do you fill out a Self Assessment each year?

Hoenir

Property income is treated as unearned income

vpsurf

Thanks for your replies so far. Yes, I declare my rental income in my Self Assessment Tax Form, because it certainly counts as "income" (there is a special section on the form for it)

I found a document called adm-chapter-h3-earned-income-employed-earnings via Google (don't know how up-to-date it is) which relates to Universal Credit, but may also apply to Personal Savings Allowance. It gives a definition of Earned Income (& does not mention rental income in it).

sheramber

The Personal Savings Allowance  depends on what rate of tax you pay on your total income.

If you pay tax at basic rate you have £1000 allowance. 

If you are a  higher  rate taxpayer you have £500 allowance. 

Nomunnofun1

vpsurf said:

Thanks for your replies so far. Yes, I declare my rental income in my Self Assessment Tax Form, because it certainly counts as "income" (there is a special section on the form for it)

I found a document called adm-chapter-h3-earned-income-employed-earnings via Google (don't know how up-to-date it is) which relates to Universal Credit, but may also apply to Personal Savings Allowance. It gives a definition of Earned Income (& does not mention rental income in it).

Rental income is not earned income. It is also not income against which your personal savings allowance or starter rate for savings can be set. 

Refer to sheramber’s post above with regard to how it, as part of total income, may affect your PSA. 

Grumpy_chap

vpsurf said:

Hi

I rent out one property (my house, while I live elsewhere). 

For Personal Savings Allowance and other tax-related purposes, will my rental income be regarded as "Earned Income" by HMRC?

Thanks in advance

No.  Not earned income so cannot be used to increase establish eligibility for pension contributions.

Also, not savings income / interest for Personal Savings Allowance purposes.

There is a separate page (SA105) in the Tax Return where income and expenses from the property are declared.

vpsurf

sheramber said:

The Personal Savings Allowance  depends on what rate of tax you pay on your total income.

If you pay tax at basic rate you have £1000 allowance. 

If you are a  higher  rate taxpayer you have £500 allowance. 

Thanks sheramber. But it also seems you have an additional allowance ("Starting rate for Savings") even when you pay basic rate tax - if your personal income is between the starting tax threshold of 12,570 and 17,570 ...

From an HMRC webpage about tax free interest on savings ...

"You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.
The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.

If your other income is £17,570 or more
You’re not eligible for the starting rate for savings if your other income is £17,570 or more.

If your other income is less than £17,570
Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1."

Dazed_and_C0nfused

vpsurf said:

sheramber said:

The Personal Savings Allowance  depends on what rate of tax you pay on your total income.

If you pay tax at basic rate you have £1000 allowance. 

If you are a  higher  rate taxpayer you have £500 allowance. 

Thanks sheramber. But it also seems you have an additional allowance ("Starting rate for Savings") even when you pay basic rate tax - if your personal income is between the starting tax threshold of 12,570 and 17,570 ...

From an HMRC webpage about tax free interest on savings ...

"You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.
The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.

If your other income is £17,570 or more
You’re not eligible for the starting rate for savings if your other income is £17,570 or more.

If your other income is less than £17,570
Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1."

And profit from rental income is a factor in determining the amount of savings starter rate band someone has.

The Personal Allowance is used first.  Then any available savings starter rate band.  And finally any savings nil rate band (aka Personal Savings Allowance).