Sarah Bradford explains how to earn tax-free income from letting a furnished room in one’s home.
The rent-a-room scheme was introduced to increase the supply of private furnished accommodation by offering tax incentives to those who let out a furnished room in their own home.
Under the scheme, individuals can earn tax-free income of up to £7,500 a year.
Who is eligible?
The rent-a-room scheme can be used by individuals who let furnished accommodation in their own homes. Users can let out as much of their home as they want – but they must continue to live there too. The scheme can also be used by people whose letting activity constitutes a trade, such as those running a guest house or providing bed-and-breakfast accommodation. You do not have to be an owner-occupier to benefit from the scheme – you can also benefit if you rent your;