My client has rental income profit from property (£18,000), rent-a-room income (£6,000) and employment income (£24,000). I understand there is a rent-a-room exemption, but does that still apply if you have rental income from other property?
Arthur Weller replies:
If you look at HMRC’s Property Income manual at www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4012 you can see that it states: 'If the taxpayer has more than one dwelling producing letting income, income from the only or main residence can only be within rent-a-room if it is a separate source from the income from other properties'. So you need to decide whether the rental income of £18,000 is derived from a separate source. See HMRC’s guidance at PIM4012 for more detail.