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Rent-a-room relief

14 December 2023

Rent-a-room scheme: Earn under £7,500 for tax exemption. No reporting for lower earnings. Homeowners can opt out if necessary. Relief applies when living in the house, letting furnished rooms. Simplifies tax tasks for income up to £7,500.

The rent-a-room scheme helps homeowners who rent out a room in their home with special rules. If you use this scheme, make sure the rents from lodgers in the current tax year do not go over £7,500. You automatically get tax exemption if you earn less than £7,500, and there are no specific tax reporting requirements. Homeowners can choose to opt out if needed and manage property income and expenses as usual.

To get relief, homeowners must live in the house while subletting rooms.

This relief only applies to letting furnished accommodation when homeowners let out a bedroom to a lodger in their home. It simplifies tax and administrative tasks for those with rent-a-room income up to £7,500. The limit is halved if joint owners share the income from letting accommodation in the same property.

The rent-a-room limit covers amounts received for meals, goods, and services like cleaning or laundry. If gross receipts exceed the limit, taxpayers can choose to pay tax on the actual profit (gross rents minus actual expenses and capital allowances) or on the gross receipts (including any balancing charges) minus the allowance—with no deduction for expenses or capital allowances.

Source: HM Revenue & Customs Tue, 12 Dec 2023 00:00:00 +0100

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