how much tax on room/studio to let?

[beaniedog]

i have just has a granny anexxe added onto my home. my mother has changed her mind and does not want to move in, If i let it out say for �570 a month how much tax do i pay and how do i go about it- also if i let out a room, i know you can charge about �80 a week tax free - but do you have to tell anyone you are doing this- thanks.

[Carol Anne]

If the money goes through your bank you will. We have a small flat we let out, and the rent we receive pays our health insurance premiums. Tax we pay, both husband and me for NI and NHS, but neither of us expect to benefit from it, ever. My conscience is clear.

[stanleyman]

You should strictly speaking declare any income to the taxman who has an uncanny knack of catching up with you later if you don't, it's your risk and depends on your other income! The same goes for the planning implications for the annex where if it is let to someone not related to you it could be considered a separate dwelling and maybe not covered by your existing planning permission and also be subject to council tax etc. You need proper advice, try the CAB.

[WendyS]

I believe there is a Revenue concession which allows you to rent a room in your property up to about �4000 a year without having to declare it. However, whether a granny annexe counts under this heading I'm not sure. I am sure your local tax office would be able to advise you on this.

[stevie21]

As far as income tax goes on the extra income it might be the case that you pay on any profit over and above your mortgage payment.
I don't think that a loophole would exist whereby you pay all of the income to one of those flexible mortgages that allow overpayments as that would be too good to be true.

I can't see why this would be any different from any other extra income from, say, a 2nd job. You'd pay tax at the same rate as you already do unless this income pushes you into a higher tax bracket.

[Gef]

Sorry for being cheeky, and curious, but at �570 a month no wonder your mother doesn't want it.

[beaniedog]

thanks for all previous answers, you have been a great help, i will have to consider all angles that i never even thought of previously! and GEF, my mum would not have been paying that amount - but a perfect stranger, i am sure would for a f/f c/h all inclusive of bills and cleaning!!!! 5 mins from heathrow as well !! but you did make me laugh!!!

[Gef]

Thanks beanie. Glad you took my comment in the manner intended. Good luck with your letting.