Tax On Lodger’s Rent

The rent-a-room scheme is a set of special rules designed to help homeowners who rent-a-room in their home. Homeowners pay no tax on lodger’s rent up to £7,500.

This tax relief applies to the letting/renting of furnished accommodation and is usually used when one bedroom in a home is rented out to a lodger for an extended period. The relief can also be used when rooms in your house are rented out online for short-term lets.

The relief also simplifies the tax and administrative burden for those with rent-a-room income up to £7,500. If the income from letting accommodation in the same property is shared by joint ownership the limit is reduced by half.

The rent-a-room limit includes any receipts for additional services such as meals, laundry or cleaning.

If your gross receipts are more than the £7,500 limit then you can choose between paying tax on the actual profit (gross rents minus actual expenses and capital allowances) or the gross receipts minus the allowance – with no deduction for expenses or capital allowances.

Posted by Cassey Nixon on

26th June 2018

Categories

  • Do You Need To Submit A Tax Return?

    There are a number of reasons why you may need to register with HMRC to submit a tax return. This could include: if you are self-employed and earning more than £1,000 per year from the self-employed activity, if you are a company director, if you have an annual income over £100,000 and / or if […]

  • Tax And Lease Premiums

    Where a freeholder (or landlord) of a property grants a new lease to a new tenant there are sometimes upfront payments due, usually known as a lease premium. The payments of these premiums are increasingly popular, and the tax implications can be complicated depending on the length of the lease. For leases of 50 years […]