The Rent a Room Scheme

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Did you know you can earn tax-free cash from renting out a room in your home?

The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation.

You can let out as much of your home as you want, but the £7,500 threshold will be halved to £3,750 if you share the income with someone else.

“You don’t need to do anything if you earn less than the threshold, the tax exemption is automatic,” said Peter Way-Rider, tax manager at Ellis & Co.

“If you earn more than the £7,500 threshold you will need to complete a tax return and opt in to the scheme to make your claim.

“If you do not want to opt in to the scheme but still wish to make a claim you can record the amount in the income and expenses property pages of your tax return.”

You can opt in to the scheme at any time if:

  • You are a resident landlord, whether or not you own your home
  • You run a bed and breakfast or a guest house

You cannot use the scheme for homes converted into separate flats.

For further information on this or any other tax matter contact Ellis & Co on 01244 343504.