The personal allowance and higher rate threshold will increase from 6 April 2019, bringing them to the levels promised in the 2015 Conservative manifesto.
The Government has brought forward its commitment to raise the income tax personal allowance and the 40% income tax threshold from 2020/21 to 2019/20. Consequently, the personal allowance for 2019/20 will increase to £12,500 (up from £11,850 in the current tax year) and the basic rate limit will rise from £34,000 to £37,500.
These thresholds will remain at the same levels for 2020/21. For future years, the personal allowance and higher rate threshold will increase in line with consumer price index (CPI).
Following a consultation on draft legislation, the Government has decided not to proceed with plans to include a shared occupancy test for rent-a-room relief.
Rent-a-room relief provides an income tax exemption for rents received by individuals who rent a room (or rooms) for residential purposes in their only or main residence. The exemption is currently £7,500.
The Government had previously announced that from 6 April 2019, it would introduce an additional ‘shared occupancy’ test for obtaining rent-a-room relief. The test would have required individuals to occupy the property at the same time as the tenant for at least some of the letting period.
The Government has decided that it will not go ahead with the introduction of this additional test in order to "maintain the simplicity of the system”.
"The shared occupancy test was largely intended to prevent those letting their homes through Airbnb and other similar sites from benefiting from rent-a-room relief when the let was of the entire property.
The withdrawal of the legislation, however, may not be the positive news it initially appears. HMRC has always taken the view that letting the whole of the property disqualifies that individual from claiming rent-a-room relief. There is nothing to suggest that this view has changed. In fact, it is stated in the Budget that the Government will “ensure the rules around the relief are clearly understood”.
This may therefore be the case of the Government deciding that the existing legislation is sufficiently robust to target rent-a-room relief at the intended users. Those letting their property through Airbnb still need to carefully consider whether or they are eligible for rent-a-room relief."