Income Tax (Trading and Other Income) Act 2005 section 800

Election for alternative method of calculating profits

Section 800 allows an individual who qualifies for rent-a-room relief to elect for an alternative method of calculating their profits, and sets out the rules governing how that election is made, withdrawn, and automatically ceased.

• An individual may elect for the alternative profit calculation method if they qualify for rent-a-room relief and their total rent-a-room income exceeds their tax-free limit for the year
• The election must specify a tax year and remains in force for that year and all subsequent years unless the individual gives notice of withdrawal
• Elections and withdrawal notices must be submitted to HMRC by the first anniversary of the normal self-assessment filing date for the relevant tax year, or by a later date if HMRC allows it
• If an election is in force but the individual's total rent-a-room income does not exceed their limit for a particular year, the election is automatically treated as withdrawn from that year onwards