Are you a landlord? Should you pay tax?
If you rent out part of your own home this can also count as residential lettings, but you can take advantage of the Rent a Room scheme. This lets you get tax-free income of up to £4,250 from letting rooms in your home.
If you let out all or part of a property and receive rent, this is treated for tax purposes as if you are running a rental business. It doesn't matter if you let just one small flat or many different properties, for tax purposes they will all be treated as a single business. Rent (after expenses have been deducted) is regarded as part of your total UK income as a taxpayer.
- Properties that you let out for people to live in as their home count as 'residential lettings'.
- If you let property abroad, you may have to pay UK tax on the rental income.
- If you let your home while you live somewhere else, your profits from the rent are worked out and taxed in the same way as for residential investment lettings.