Rental Property Income

Rent A Room Relief

“Rent A Room” relief allows people to let out rooms in their main residence without paying tax on the income.

Currently the threshold is £4,250.  It has been at this level for many years.

The Chancellor announced that the Rent A Room threshold would rise to £7,500 from 2016/17.

Wear And Tear Allowance

“Wear and Tear Allowance” is a relief given to landlords with income from furnished residential accommodation.  The relief is claimed instead of the actual cost of replacing items such as furniture, carpets and curtains and is 10% of net rents.  (Net rents are rental income less water and council tax costs.)

From April 2016, Wear And Tear Allowance will be replaced by a new relief which allows landlords of furnished residential lettings to deduct the actual costs of replacing furnishings.

This relief will only apply to furnished residential lettings (not to unfurnished lettings).  Capital allowances will continue to apply for furnished holiday lettings.

Mortgage Interest Relief for Private Landlords

Currently people who let out residential properties, and have a mortgage on the property, get tax relief on the interest paid at their normal tax rate, be that 20%, 40%, or 45%.

This relief will be restricted from April 2017 so that only basic rate tax relief (20%) is given on the mortgage interest paid.  This means that higher rate taxpayers will only get basic rate tax relief on the mortgage interest paid.

The restriction will be phased in gradually over four years from April 2017 to April 2020.

This measure will not affect furnished holiday letting businesses, where full relief will still be given for higher rate taxpayers.

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Nov 25

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We changed from our old accountants to Dodd & Co last year and not only did you offer the accountancy service for a cheaper fee than our previous accountants, but you have proved to be more pro-active in giving advice. We were recommended that we change the way we account for VAT and although this is not a huge saving per year, it is better in our pockets than the VAT man's. The main saving to ourselves is the time taken to complete the VAT returns. It was also suggested that we consider becoming a Limited Company rather than a Limited Liability Partnership and we are going to do this at the end of our financial year. This will save us more money, as it will reduce our yearly tax bills. We would recommend using Dodd & Co to any of our clients (or yourselves) and plan to do so in the future.
-- A L Robinson, Johnstons