Sign up for our FREE monthly newsletter

Don't miss out on amazing content

Part of our vision is to share our expert insight and knowledge to help business owners achieve success. Sign up today!

Client PortalXERO LoginClient Services Brochure
Download our Client Services Brochure

Rent-a-room relief

POSTED BY: Adam Walters

23 March 21

The rent-a-room scheme is a set of special rules designed to help homeowners who rent-a-room in their home. The current tax-free threshold of £7,500 per year has been in place since 6 April 2016. If you are using this scheme you should ensure that rents received from lodgers during the current tax year do no exceed £7,500. The tax exemption is automatic if you earn less than £7,500 and there are no specific tax reporting requirements.

The relief applies to the letting of furnished accommodation and can be used when a bedroom is rented out to a lodger by homeowners in their home. The relief also simplifies the tax and administrative burden for those with rent-a-room income up to £7,500. The limit is reduced by half if the income from letting accommodation in the same property is shared by a joint owner of the property.

The rent-a-room limit includes any amounts received for meals, goods and services provided, such as cleaning or laundry. If gross receipts are more than the limit, taxpayers can choose between paying tax on the actual profit (gross rents minus actual expenses and capital allowances) or the gross receipts (and any balancing charges) minus the allowance - with no deduction for expenses or capital allowances.

THE LATEST NEWS & BLOG POSTS FROM TEAM CB

Certificate of Good Standing

Need to prove your company is sound and in good health?

The Super Deduction

Companies can claim super-deduction from 1 April

Tax-free property and trading income

Don’t forget the new rules introduced in April 2017