If you rent any part of your main home out for residential purposes, there’s a tax free threshold of £7500 per year, effective from the 2016/2017 tax year. This means the first £7500 of the gross rent is tax free. Note that you cannot deduct expenses if you are taking advantage of this tax free option.
If, on the other hand, you have a lot of expenses or likely to make a loss, you may prefer to forego the above gross rent tax free option and adopt the traditional way of working out your tax, if any, on profits. This means you submit tax returns based on the profit (or loss).
Get in touch if you need help working out the better option for your circumstances.
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