House of Commons portcullis
House of Commons
Session 2004 - 05
Internet Publications
Other Bills before Parliament

Income Tax (Trading and Other Income) Bill


Income Tax (Trading and Other Income) Bill
Part 6 — Exempt income
Chapter 10 — General

338

 

780     

Disabled person’s vehicle maintenance grant

(1)   

No liability to income tax arises in respect of a disabled person’s vehicle

maintenance grant.

(2)   

For this purpose a “disabled person’s vehicle maintenance grant” means a

grant to any person owning a vehicle that is made under—

5

(a)   

paragraph 2 of Schedule 2 to the National Health Service Act 1977

(c. 49),

(b)   

section 46(3) of the National Health Service (Scotland) Act 1978 (c. 29),

or

(c)   

Article 30 of the Health and Personal Social Services (Northern Ireland)

10

Order 1972 (S.I. 1972/1265 (N.I. 14)).

781     

Payments under New Deal 50plus

(1)   

No liability to income tax arises in respect of a payment that is made—

(a)   

by way of training grant under the “New Deal 50plus” scheme, and

(b)   

to a person as a participant in that scheme.

15

(2)   

For this purpose the “New Deal 50plus” scheme means —

(a)   

the scheme under section 2(2) of the Employment and Training Act

1973 (c. 50) known as “New Deal 50plus”, or

(b)   

the corresponding scheme under section 1 of the Employment and

Training Act (Northern Ireland) 1950 (c. 29 (N.I.)).

20

782     

Payments under employment zone programme

(1)   

No liability to income tax arises in respect of a payment that is made to a person

as a participant in an employment zone programme.

(2)   

For this purpose an “employment zone programme” means an employment

zone programme established for an area or areas designated under section 60

25

of the Welfare Reform and Pensions Act 1999 (c. 30).

Chapter 10

General

783     

General disregard of exempt income for income tax purposes

(1)   

Amounts of income which are exempt from income tax as a result of this Part

30

(whether because the type of income concerned is exempt from every charge to

income tax or because it is exempt from every charge that is relevant to those

particular amounts) are accordingly to be ignored for all other income tax

purposes.

(2)   

An exception to this is that interest on deposits in ordinary accounts with the

35

National Savings Bank which is exempt under this Part from every charge to

income tax is not to be ignored for the purpose of providing information.

(3)   

This express exception to subsection (1) is without prejudice to the existence of

any other implied or express exception to that subsection (whether in

connection with the provision of information or otherwise).

40

 
 

Income Tax (Trading and Other Income) Bill
Part 7 — Income charged under this Act: rent-a-room and foster-care relief
Chapter 1 — Rent-a-room relief

339

 

Part 7

Income charged under this Act: rent-a-room and foster-care relief

Chapter 1

Rent-a-room relief

Introduction

5

784     

Overview of Chapter 1

(1)   

This Chapter provides relief on income from the use of furnished

accommodation in an individual’s only or main residence.

   

The relief is referred to in this Chapter as “rent-a-room relief”.

(2)   

The form of relief depends on whether the individual’s total rent-a-room

10

amount exceeds the individual’s limit (see sections 788 to 790).

(3)   

If it does not, the income is not charged to income tax unless the individual

elects otherwise (see sections 791 to 794).

(4)   

If it does, the individual may elect for alternative methods of calculating the

income (see sections 795 to 798).

15

785     

Person who qualifies for relief

(1)   

An individual qualifies for rent-a-room relief for a tax year if the individual—

(a)   

has rent-a-room receipts for the tax year (see section 786), and

(b)   

does not derive any taxable income other than rent-a-room receipts

from a relevant trade, letting or agreement.

20

(2)   

“Taxable income” means receipts or other income in respect of which the

individual is liable to income tax for the tax year.

(3)   

A relevant trade, letting or agreement is one from which the individual derives

rent-a-room receipts for the tax year.

Basic definitions

25

786     

Meaning of “rent-a-room receipts”

(1)   

For the purposes of this Chapter an individual has rent-a-room receipts for a

tax year if—

(a)   

the receipts are in respect of the use of furnished accommodation in a

residence in the United Kingdom or in respect of goods or services

30

supplied in connection with that use,

(b)   

they accrue to the individual during the income period for those

receipts (see subsections (3) and (4)),

(c)   

for some or all of that period the residence is the individual’s only or

main residence, and

35

(d)   

the receipts would otherwise be brought into account in calculating the

profits of a trade or UK property business or chargeable to income tax

under Chapter 8 of Part 5 (income not otherwise charged).

 
 

Income Tax (Trading and Other Income) Bill
Part 7 — Income charged under this Act: rent-a-room and foster-care relief
Chapter 1 — Rent-a-room relief

340

 

(2)   

Meals, cleaning and laundry are examples of goods or services supplied in

connection with the use of furnished accommodation in a residence.

(3)   

If the receipts would otherwise be brought into account in calculating the

profits of a trade, the income period is the basis period for the tax year (see

Chapter 15 of Part 2).

5

(4)   

Otherwise the income period is the period which—

(a)   

begins at the beginning of the tax year or, if later, the beginning of the

letting in respect of which the receipts arise, and

(b)   

ends at the end of the tax year or, if earlier, the end of that letting.

787     

Meaning of “residence”

10

(1)   

In this Chapter “residence” means—

(a)   

a building, or part of a building, occupied or intended to be occupied as

a separate residence, or

(b)   

a caravan or houseboat.

(2)   

If a building, or part of a building, designed for permanent use as a single

15

residence is temporarily divided into two or more separate residences, it is still

treated as a single residence.

788     

Meaning of “total rent-a-room amount”

(1)   

For the purposes of this Chapter an individual’s “total rent-a-room amount”

for a tax year is the total of—

20

(a)   

the individual’s rent-a-room receipts for the tax year, and

(b)   

any relevant balancing charges for the tax year (see section 802).

(2)   

In calculating the total rent-a-room amount, no deduction is allowed for

expenses or any other matter.

Individual’s limit

25

789     

The individual’s limit

(1)   

For the purposes of this Chapter an individual’s limit for a tax year depends on

whether the individual meets the exclusive receipts condition for the tax year

(see section 790).

(2)   

If the individual does, the individual’s limit for the tax year is the basic amount

30

for the tax year.

(3)   

If the individual does not, the individual’s limit for the tax year is half that

amount.

(4)   

The basic amount for a tax year is £4250.

(5)   

The Treasury may by order amend the sum for the time being specified in

35

subsection (4).

 
 

Income Tax (Trading and Other Income) Bill
Part 7 — Income charged under this Act: rent-a-room and foster-care relief
Chapter 1 — Rent-a-room relief

341

 

790     

Exclusive receipts condition

(1)   

An individual meets the exclusive receipts condition for a tax year if, for each

rent-a-room residence of the individual, no receipts accrue to any other person

during any relevant period in respect of—

(a)   

the use of residential accommodation (whether furnished or not) in the

5

residence, or

(b)   

goods or services supplied in connection with that use (such as meals,

cleaning or laundry),

   

at a time when the residence is the individual’s only or main residence.

(2)   

Each of the following periods is a relevant period—

10

(a)   

any income period specified in section 786 for any rent-a-room receipts

of the individual for the tax year,

(b)   

the period of 12 months which begins at the same time as any such

income period begins, and

(c)   

the period of 12 months which ends at the same time as any such

15

income period ends.

(3)   

A “rent-a-room residence of the individual” means a residence in respect of

which the individual derives rent-a-room receipts for the tax year.

Relief if amount does not exceed limit

791     

Full rent-a-room relief: introduction

20

Sections 792 to 794 (which give the full form of rent-a-room relief) apply if—

(a)   

an individual qualifies for rent-a-room relief for a tax year,

(b)   

the individual’s total rent-a-room amount for the tax year does not

exceed the individual’s limit for the tax year, and

(c)   

no election by the individual under section 799 has effect to disapply

25

the full relief for the tax year.

792     

Full rent-a-room relief: trading income

(1)   

This section applies if the individual has any rent-a-room receipts for the tax

year which would otherwise be brought into account in calculating the profits

of a trade.

30

(2)   

The profits or losses of the trade for the tax year are treated as nil.

793     

Full rent-a-room relief: property income

(1)   

This section applies if the individual has any rent-a-room receipts for the tax

year which would otherwise be brought into account in calculating the profits

of a UK property business.

35

(2)   

In calculating those profits—

(a)   

those receipts for the tax year, and

(b)   

any expenses associated with them,

   

are not brought into account.

(3)   

No relevant balancing charge or relevant allowance (see section 802) is made

40

in calculating those profits for the tax year.

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2004
Revised 1 December 2004