Property income refers to income from land or buildings. This includes any rental income from a flat or from part of a flat or house, such as a room or a parking space. Income from trade such as a hotel or other business such as hairdressing at home would not be considered property income, but would still be taxable as self-employment income. This blog will discuss whether you must pay tax on property income, whether tax applies on income from property overseas and will briefly outline what tax relief and allowances are available.
Those who make an income from property are required to pay tax on all property income. However, this is not always the case, especially if their property income fits the criteria of at least one of the specific reliefs and allowances (which is discussed below in this blog – see question 3).
If you have property overseas, you may or may not have to pay UK tax on income from that overseas property depending on your circumstances. UK residents are required to inform HMRC (His Majesty s Revenue & Customs) about their income from overseas property. When completing a Self-Assessment tax return, you must report your income separately as foreign income.
Letting out a room in your home
If you let out a room in your home, you may be eligible for ‘Rent-a-room’ relief on the initial £7,500 for 2022/23 of income because of renting out a room in your main residence.
Furnished holiday lettings
If you let out property on a short-term basis, for example, to tourists and visitors, there may also be specific reliefs and allowances which you can find on the HMRC website.
You may also be able to get up to £1,000 each year in tax-free allowances for property. You can find out more information on the HMRC website here: Tax-free allowances on property and trading income – GOV.UK (www.gov.uk)
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