News and Views
Have you a room to rent?

If you are currently renting a room in your house or have one available for letting, you could be missing out on a tax-free income.

Rent a room relief is available for owner-occupiers and tenants who receive rent from letting furnished accommodation in their only or main home. In general, gross annual receipts (including sums paid in respect of meals or services provided in connection with the use of accommodation) not exceeding £4,250 in total will be exempt from income tax altogether.

In addition, if you have receipts over the £4,250 exemption limit you can be taxed on an alternative basis, which may produce a lower tax bill. Briefly, the excess of the gross receipts over the exemption limit is treated as the taxable rental income, instead of the actual profit. You cannot then claim any of the expenses of the letting.

If you want to be taxed on the excess over £4,250 you must make a claim to do so. That basis will apply until you withdraw your claim.