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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