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What is a Rent A Room Relief?

9th August 2019

The Rent a Room relief is an optional scheme that allows you to earn up to £7,500 a year tax-free (or £3,750 if you’re letting jointly) when you let out furnished accommodation to a lodger in your main home and you are also living in the accommodation for at least some of the time that the accommodation is let.

Claiming the Rent A Room Relief

  • Rental Income below £7,500 per year

When your rental profit for a tax year is less than £7,500, then you will be automatically exempt from paying income tax so you don’t have to do anything.

  • Rental Income above £7,500 per year

When you earn more than the threshold, then a tax return needs to be completed.

In this case, you can choose to claim the relief and pay income tax on the excess rent (above £7,500p.a.) or you can choose to pay income tax on your rental profit (on the amount of the rent received after deducting any allowable rental expenses).

The latter can be more tax efficient when you had high rental associated expenses in the year.

If you’re looking to find out more about the relief or discuss in more details your current situation, please do not hesitate to contact us.