Industry News - 17th May 2023
If you’re a homeowner or a tenant in a rental property, you could earn up to £7,500 per year tax free if you rent out a room in your home to a lodger. The Rent a Room Scheme is a set of special rules designed to help owner occupiers or tenants who rent out fully furnished accommodation in their main home.
You do not need to own your own home to qualify, but if you rent a property, you will need your landlord’s permission to sub-let.
If the amount you earn from renting the room is less than the £7,500 threshold, the tax exemption is automatic and there are no specific tax reporting requirements.
If your income exceeds the threshold, you will need to complete a tax return and you will then be able to:
• EITHER – opt in to the scheme – you must advise HMRC on your tax return and claim your tax-free allowance
• OR – not opt in – you will need to record your income and expenses on the property pages of your tax return.
The relief simplifies the tax and administrative burden for those with rent a room income up to £7,500. If you share the income with another person, you can then only claim £3,750 each.
The rent a room limit includes any amounts received for meals, goods and services provided, such as cleaning or laundry.
Get in touch if you would like to know more about the Rent a Room Scheme and whether it’s right for you.
Internet link: GOV.UK