The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.
You can let out a room or an entire floor.
How it works
The tax exemption is automatic if you earn less than the threshold. This means you don’t need to do anything.
You must complete a tax return if you earn more than the threshold. From 6 April 2016, this is £7,500. For the 2015 to 2016 tax year, the threshold was £4,250.
When you can use the Rent a Room Scheme
You can use the scheme if:
- you let a furnished room to a lodger
- your letting activity amounts to a trade, for example, if you run a guest house or bed and breakfast business, or provide services, such as meals and cleaning
When you can’t use the Rent a Room Scheme
You can’t use the scheme if the accommodation is:
- not part of your main home when you let it
- not furnished
- used as an office or for any business – you can use the scheme if your lodger works in your home in the evening or at weekends or is a student who is provided with study facilities
- in your UK home and is let while you live abroad
- the whole of your home, rather than a part of it
SpareRoom, the UK’s busiest flatshare site. Every three minutes, someone finds a flatmate with SpareRoom.
The table below shows the change in monthly rents between 2009 and 2014 according to Spareroom:
|Ave Rent 2009 (£)||Ave Rent 2014 (£)||Rental Increase %|
|London & suburbs||£549||£691||25.8%|
|North West England||£316||£359||13.8%|
|South East England||£390||£449||15.2%|
|South West England||£347||£394||13.7%|
|Yorkshire & Humberside||£312||£347||11.3%|