Rent a room scheme

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. From the 6th April 2019 you must be resident in the property at the same time as the tenant.

Gross rents include any receipts for meals, 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 is more than £7500. The expenses which could be claimed are those which relate to the provision of the accommodation.

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

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

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

DISCLAIMER
© Thandi Nicholls Ltd 2020 All Rights Reserved – The above articles are provided for guidance only and may not cover your personal circumstances so you should not rely on them. 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 uklandlordtax.co.uk, 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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