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

  • Protecting yourself from an HMRC investigation

    A tax investigation is stressful, time consuming and usually very expensive. And it could easily happen to you. HMRC’s investigations are more focused than ever before. During the tax year 2017-18, the tax man collected over £30 billion through ‘compliance activity’. Special investigators are using high tech methods to gain information and maximise tax revenues. […]

  • Loss Buying Restrictions

    Under qualifying circumstances, Corporation Tax relief is available where your company makes a trading loss. The trading loss can be used by offsetting the loss against other gains or profits of your business in the same or previous accounting period. The loss can also be set against future qualifying trading income. However, there are restrictions […]