Rent a room scheme vs capital appreciation on a PPR

Ok thanks,il just keep it below 14000,reducing the rent etc thanks
 
let's say 18000,so need pay tax roughly 9000,can I claim expenses against this 9000,eg like I pay the electricity,bins ,wifi so let's says that comes to 4000,do I pay tax of 5000 then?
No.

Two issues here.

First, this is rent from a room in your house. But expenses like electricity, bins and wifi are for the whole house, not just the room you're letting out. So you need to apportion these expenses between the part of the house that is let to the tenant and the rest of the house. I think this is typically done on an area basis, so if the house is 200 sq m and the room you have let out is 24 sq m, only 24/200 (= 12%) of the utilility, etc, bills would be deductible. (The position would be different if, say, the electricity for the tenant's room was separately metered so you could measure exactly what you paid for the tenant's power consumption. Then you could deduct the exact amount.)

Secondly, the deductible amount isn't deducted from the tax payable; it's deducted from the gross rent. So, running with your example and your assumed 50% tax rate (and my assumptions about the area of the house and the area of the room), the calculation would be:

Gross rent: 18,000

Less deductible portion of utilty bills: 4,000 x 12% = 480

Net rent: 17,520

Tax at 50%: 8,760
 
Back
Top