Sarah Bradford explains how the rent-a-room scheme can be used to generate tax-free rental income from letting a room in one’s main home.
The rent-a-room scheme allows owner-occupiers and tenants to earn rental income tax-free up to their rent-a-room limit by letting one or more spare rooms in their home. If the rental income received does not exceed the permitted amount, the income does not need to be reported to HMRC.
You can still benefit from the scheme if your rental income exceeds the limit by claiming rent-a-room relief rather than by deducting actual expenses.
When the scheme can be used
You can use the scheme if you let one or more furnished rooms to a lodger or lodgers. The rooms must be in the property you occupy as your main home, either as an owner occupier or a tenant (but if you are a tenant, check with the landlord that you are able to
