Commentary on Sections Part 7: Income charged under this Act: rent-a-room and foster-care relief Overview Section 786: Meaning of “rent-a-room receipts”
2938.This section defines “rent-a-room receipts”. It is based on paragraphs 2, 4 and 8 of Schedule 10 to F(No 2)A 1992.
2939.Subsection (1)(a) makes explicit what is merely implicit in the source legislation: that the let accommodation must be in the United Kingdom to be within rent-a-room. This approach also removes a disqualification from rent-a-room relief that can arise in respect of a let United Kingdom residence when exceptionally the individual also lets an overseas residence at the same time. See Change 129 in Annex 1.
2940.Subsection (1)(b) refers to an “income period”. The period for which receipts must satisfy certain conditions is identified in the source legislation as the “basis period”. “Basis period” was appropriate to Schedule D Case I income but less so when applied to Schedule A income where it was potentially confusing. The use of “income period” in the rewritten section makes it possible to avoid using “basis period” for property income and income charged under Chapter 8 of Part 5 of this Act: the conditions have to be satisfied by reference to the events of an “income period”. That is, for trade profits, the basis period (see subsection (3)). But for property income and income charged under Chapter 8 of Part 5 of this Act it is the tax year or, if letting begins or ends during the tax year, the date of, respectively, the beginning and the end of the letting (seesubsection (4)).
2941.One incidental consequence of this approach is the way in which it works in conjunction with the requirement in subsection (1)(c). It makes explicit the period during which the “only or main residence” requirement must be met in the years when a letting begins or ends and the income is taxable as property income (in the source legislation it was not clear what was meant by “basis period” in these cases). Now it is explicit that the period is concurrent with the period of the letting and does not extend to the whole of the tax year.
2942.Subsection (1)(d) ensures that when the relief is in respect of income chargeable under the trading or property income Parts of this Act, it continues to apply only to amounts to which it applies under the source legislation, that is, to rent-a-room lettings which give rise to trade or property business profits. This provision is necessary because the charges under the trading income and property income Parts of this Act go wider than purely trade and property business profits and include (for example) post-cessation receipts.
2943.Subsection (1)(d) also extends rent-a-room relief to income from the provision of the incidental services mentioned in subsection (1)(a) that would, in the source legislation, be charged under Schedule D Case VI and excluded from rent-a-room. See Change 128 in Annex 1.