Income Tax (Trading and Other Income) Act 2005 section 793

Full rent-a-room relief: property income

Section 793 provides for full rent-a-room relief where the rental income would otherwise be treated as property income, by excluding both the receipts and associated expenses from the property business profit calculation.

• Where rent-a-room receipts fall within a UK property business, full relief means those receipts are completely excluded from the profit calculation for the tax year.
• Any expenses associated with the rent-a-room receipts are also excluded — you cannot claim deductions for costs related to income that is not being taxed.
• No capital allowances or balancing charges relating to rent-a-room assets are included in the property business profit calculation for that tax year.
• The overall effect is that the rent-a-room activity is treated as though it does not form part of the property business at all.