With services like AirBnB making it so easy, I was thinking of renting out my home while I’m away. Will I have to pay tax on that income?
There is a special scheme related to the provision of furnished accommodation in your own home. This applies whether you own or rent your property, and covers holiday lets as well as having a lodger. It is known as the Rent-a-Room scheme. This currently allows you to receive up to £7,500 per annum tax-free (£3,750 per person when the house is jointly owned). Unlike many other allowances, it is not reduced if you rent for less than 12 months.
To qualify for the relief, you must meet the following conditions:
• the property rented is all or part of your only or main home at the time you are renting it. This covers absence due to holidays, but would not be the case if you lived elsewhere on a permanent basis
• the rented part is furnished
• the tenant uses it solely for residential purposes, not as an office or for other business purposes.
If your rental meets these conditions and your income is below the limit, it is not taxable. If your rental income is above this limit, the scheme may still be useful to you. This is because you can opt to deduct the Rent-a-Room amount from your income instead of calculating your actual rental expenses. This can be useful for those with few expenses, but a taxable loss cannot be created by doing this. Any excess is taxable as normal rental income.
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