How much rental income can I receive before paying 40% tax?

I earn £30,000 p.a. taxed under PAYE, but also have a variable amount of rental income. I have read that 40% tax applies above £35,000 but I’ve also been told I can earn £42,475 before paying 40% tax. How much rental income can I receive before paying 40% tax?

 

The 40% tax rate applies in the current tax year (2011/12) on taxable income above £35,000. This is your total income (earnings, rentals and any interest or dividends) less your tax free allowance of £7,475 and any other valid deductions, such as expenses relating to your rental income. So you can have gross income before deductions of £42,475 (£35,000 + £7,475) before you have to pay 40% tax. However, you must declare any rental income you receive to HMRC.

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