Income Tax (Trading and Other Income) Act 2005 (c. 5)

Part 7 U.K. Income charged under this Act: rent-a-room and [F1 qualifying care] relief

Textual Amendments

F1 Words in Pt. 7 heading substituted (16.12.2010) (with effect in accordance with Sch. 1 para. 36 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 1 para. 34 (with Sch. 1 para. 37)

Chapter 1 U.K. Rent-a-room relief

Alternative calculation of profits if amount exceeds limit U.K.

797 Alternative calculation of profits: property income U.K.

(1) This section applies if the individual has any rent-a-room receipts for the tax year (“Part 3 rent-a-room receipts”) which are to be brought into account in calculating the profits of a UK property business.

(2) In calculating those profits for the tax year—

(a) the Part 3 rent-a-room receipts for the tax year are brought into account only in calculating the profits of the business for the tax year, and

(b) any expenses associated with those receipts are not brought into account.

(3) In calculating those profits for the tax year—

(a) a deduction is allowed, and

(b) no relevant allowance, but any relevant balancing charge, is made.

(4) The amount of the deduction—

(a) is L if all the individual's rent-a-room receipts for the tax year are Part 3 rent-a-room receipts, and

(b) otherwise, is—

but, in either case, subject to a maximum of P.

(5) In subsection (4)—

• L is the individual's limit for the tax year,

• P is the individual's Part 3 rent-a-room receipts for the tax year, and

• R is all the individual's rent-a-room receipts for the tax year.