Income Tax (Trading and Other Income) Bill

House of Commons

Session 2004 - 05
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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.
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(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.)).
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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
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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).
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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).
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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.
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(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
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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
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(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).
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(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”
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(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—
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(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
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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
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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
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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—
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(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
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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
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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
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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.
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(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.
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(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
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in calculating those profits for the tax year.