Client has a lodger, paying about £200 a month, for rent, extra Council Tax, food, electricity etc. Will this be counted as income for calculating Working Tax Credit. I know that misc income is counted if it is taxable under Inland Revenue, Case V1, Schedule D on Income Tax 1988, but how can I find out if income from lodgers is included in that.

Any ideas of where to look.
Thanks

Commentary in Vol4 of Social Security legislation (Wikeley and Williams) puts letting out a room as 'property income' and suggests only counts as income if go above 'rent a room' allowance in the Income Tax rules and therefore income of upto £50 pw is excluded from TC calc as under £4,250 rent a room allowance. But are we to have the same debate as other benefits about the difference between a boarder and a lodger or does one catch all for TC??

I thought about the rent a room allowance, but wasnt sure if that was the same thing. If the £50 a week (which may increase to £60)includes all meals, electricity, gas, etc, would these costs be deductable before calculating taxabke income.

Hi
Did you ever get a definitive answer to this?
Clive

The same rules apply to working out taxable income for Income Tax purposes as for WTC purposes. For letting out a furnished room in your own home the taxable income is essentially the gross annual receipts (includiong food, utilities and any services) minus the Rent a Room relief allowance.

HMRC guidance is at http://www.hmrc.gov.uk/helpsheets/ir223.pdf#search=%22hmrc%20rent%20a%20room%20relief%22