Rent a room scheme
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0800 907 8633 is the trading name of Thandi Nicholls Ltd Accountants Registered Office Creative Industries Centre Glaisher Drive Wolverhampton WV10 9TG Registered in England Company Number 7319439 Directors K W Nicholls FCA S S Thandi BA

If you let out a furnished room in your home, provided it is not an office, Rent a Room relief can be claimed rather than paying tax on the net profit. Rent a room relief is a fixed figure of up to £7500 per household (£3750 each for a couple) and is deducted from the gross rents received.

Gross rents include any receipts for meal, laundry or other amounts. You cannot deduct any expenses if you claim Rent a Room relief nor can it create a loss. It is simpler than apportioning all the home expenses and is normally more beneficial.

If your gross receipts are less than £7,500 then you would automatically claim the Rent a Room relief. If you receive more than this figure, you have to see if your share of expenses are more than £7500. The expenses which could be claimed are those which relate to the provision of the accommodation.

David has a lodger who has a couple of rooms in Davidís home. The rent and amounts received for meals totals £9,500. The share of expenses relating to the provision of the accommodation and meals is £2975.

Clearly it is advantageous to claim Rent a Room relief in this instance because the taxable income is £4,525 lower.

© Thandi Nicholls Ltd 2017 All Rights Reserved - The above article is provided for guidance only and may not cover your personal circumstances so you should not rely on it. It is important that you seek  appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a, K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.

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David has the choice: Rent a Room Profit
Receipts £9500 £9500
Expenses Nil £2975
Rent a Room £7500 Nil
Net Income £2000 £6525