What is the Rent a Room Scheme?

The rent a room scheme is a tax allowance whereby you can rent out a room in their house and receive £4,250* a year tax-free (£2,125 if letting jointly) in rental income. It means, in essence, that you can earn extra money tax free by letting out a spare room in your house or property up to the limit.

How does it work?

The rent a room scheme is optional and allows you to receive rental income free of tax on a furnished room in your only or main residence. You don't need to own the home, but can be renting it to take advantage of the scheme, if you do rent the property you may need to check the lease to see if it is permissible.

The scheme can also apply to businesses such as bed and breakfast and guest houses.

Can I provide other services?

The scheme does allow you to provide other services such as meals or laundry, but payments for these must be added to the rental income.

What do I need to do?

If you decide to take up the scheme, you will need to calculate the amount of rental income you receive after your expenses, if the total amount is below the rent a room threshold then you do not need to do anything, if the amount is above the threshold you will need to tell the HMRC by filling out a tax return to claim the allowance.

How can mondaytofriday help?

mondaytofriday.com can help to put lodgers and landlords together. It is easy to place an advert for your room on the website and lodgers can search and browse for suitable rooms in the desired location.

*correct at time of publication, amount may change according to tax regulation

More information
Direct.gov.uk rent a room scheme