Do I have to declare this income on my tax return?
If you earn less than £7,500
To make things simple, there is an 'automatic tax exemption'—which means that if you earn under the £7,500 (or £3,750) threshold, you don't need to include this income on your tax return.
If you earn more than £7,500
However, if you earn over the threshold, then you will need to declare this income on your tax return. If, for example, you earn £10,000 (over the course of a year) from renting out a room in your house, then you can either:
- Declare the £10,000 income, minus any expenses or 'capital allowances' that you've had in maintaining the room; or
- Declare the £10,000 income, minus the £7,500 allowance
Depending on how big your expenses were for the year, it will usually be best to claim the £7,500 allowance.
You usually work all of this out based on the tax year, which runs from 6th to 5th April.