HMRC have confirmed that an individual can claim the property allowance for one property and rent a room relief for another.
If rent a room income is below £7,500*, this is very straightforward. In HMRC Forms mode, on page UKP1, tick box 4 (If you are claiming rent a room relief and your rents are £7,500* or less). In SimpleStep, go to Other Income > UK Property and Furnished Holiday lettings in the EEA and tick that you’re claiming rent a room relief and also tick that gross rents came to less than £7,500. No other entries are needed for the rent a room income and any other property income and the property allowance can be entered in the usual way.
If rent a room income exceeds £7,500*, you will not be able to enter rent a room relief and the property allowance without an error. As a workaround, in TaxCalc, please follow the steps below:
In HMRC Forms Mode:
- Go to UK Property, page 2
- In box 20 (Total rents and other income from property?), enter the rent a room income after deducting £7,500*, plus other rental income.
- In box 20.1 (Property income allowance) enter the property income allowance being claimed (property income allowance must not exceed the lower of the other property income and £1,000**)
- Leave box 37 (rent a room exempt amount) blank.
In SimpleStep:
- Go to Other Income
- UK Property and Furnished Holiday lettings in the EEA > Other rental income
- If you are pooling rental income from several properties, enter rental income for the rent a room property plus other property minus £7,500*. If you are entering income separately per property, repeat this for each source by creating a name for each.
- Enter the property allowance being claimed (only once if entering several properties).
- You do not need to make any entries in the rent a room section.
* If the property is let jointly, the allowance is £3,750 per individual.
** If the property is let jointly, each individual can claim £1,000.
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