Rent a Room Scheme
What is the Rent a Room Scheme?
Thanks to SpareRoom's successful six-year campaign, if you rent out a room in your home, you can earn up to £7,500 a year in tax-free income. This is all due to a government incentive called the Rent A Room Scheme, designed to encourage people to take in lodgers.
How it works
- You let out a room or part of your main property (it can be a whole floor but not a self-contained flat)
- It must be furnished unfurnished rooms dont qualify
- You dont have to be a homeowner if you have your landlords consent you can use the scheme as a tenant
- If you dont normally fill out a tax return and the income is below £7,500 (around £625 a month), the exemption will be automatic so dont worry about doing anything. If the amount you earn is above the threshold, let the tax office know
Things to consider
If you usually fill out a tax return then have a think the Rent a Room scheme doesnt allow you to claim expenses for wear and tear, insurance etc. So if you spend more on decorating the room and keeping it in order than you make in rent, youll end up making a loss and wont be liable for tax.
For more information, see our full guide to the rent a room scheme.