Some people rent space in their homes to other individuals. Normally all income from letting including in your own home, needs to be reported to HM Revenue & Customs. However, the Revenue recognise that not all income received will be chargeable once all allowable expenses have been deducted – hence rent-a-room relief.

As a general rule to qualify for rent-a-room relief you must

  • Be an individual
  • Be your main or only residence whether owned or tenanted by yourself – special rules apply to individuals working abroad
  • Receive monies from the letting of furnished accommodation in your own or your main home. If you receive monies from unfurnished accommodation you do not qualify for rent-a-room relief
  • Receive no more than £4250 of income in any 12 month period. If say a couple both receive the income then this limit is shared between them, so they each have a limit of £2125.
  • The income received has to be calculated to include rent, meals or good and services in connection with the use of the accommodation. If the total amount received exceeds £4250 you do not qualify and you must report this income to HM Revenue & Customs. For more details if you do not qualify click here

If you do qualify HM Revenue & Customs treat you as

  • Making no profit
  • Making no loss

There is no need to notify HM Revenue & Customs of this income. You must still keep records of all income received just in case they ask!

If you complete a Self Assessment form you must make a disclosure on your Tax Return that you have income from property under the rent-a-room scheme.