This scheme will not apply to everyone but can be a nice earner for people with a spare room in their home looking to earn a bit of extra tax-free cash — so is it relevant to you?

The Rent a Room Scheme allows people to earn up to a maximum of £7,500 a year (to 5th April each year) free of income tax, from letting out accommodation, which must be furnished accommodation, in your home. 

The threshold is halved to £3,750 if you share the income with someone else and you can let out as little or much of your home as you want. See below. 

The tax exemption as above is automatic if you bring in rent of less than your threshold so therefore you do not need to do anything.

However you must complete a self assessment tax return if you earn more than your threshold.

This means that you will have to register for self assessment using the online forms by the relevant deadline each tax year and obtain a UTR  — a unique taxpayer reference. You  are then able to register for the government gateway and file your own tax returns. However, this can often not be simple for people and we are here to help you with this if you need us. You can then opt into the scheme and claim your tax-free allowance on your tax return.

As an alternative you do not have to use the rent a room scheme, you can follow the normal rental income rules and file a tax return each year and complete the normal property income and expenses pages of that tax return, declaring your profit or loss accordingly.

You can opt in to the scheme at any time if you are a resident landlord, whether or not you own your home or you run a bed and breakfast or a guest house. You cannot however ever use the scheme for homes converted into separate flats and bedsits etc.

Or further information or assistance with completing the tax returns, contact us as below;-

Contact Andy on 07879 464577 or Lindsay on 07584 706664

Or complete our contact form to send us an email to which we will give you a prompt reply.