Renting out a Room is a great way to earn some tax free cash and in the Summer Budget an increase in the tax free allowance was announced…
The government will increase the Rent-a-Room relief from £4,250 to £7,500 a year from April 2016. The value of this relief has been frozen since 1997, so this increase will allow individuals who rent a room in their main residence to do so tax free on income up to £7,500 to reflect increases in rent.
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
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
You can get further details in HS223
Finding a lodger shouldn’t be too difficult and websites like Spare Room can help.