The simple answer to this is yes, however, you will pay tax on the rent over £4250 and you cannot claim any expenses against rents received over £4250.00.

You can still disclose your rents in the normal way and not claim rent-a-room relief, it may be more beneficial to set off expenses actually incurred, expenses are split between the owners and tenant. You should ensure the tenancy agreement makes it clear who pays for what.

It may be that one year you rent out 2 rooms in your property, and in that instance it may be beneficial to set off the property expenses in the normal way, i.e. tenants share of expenses set off against rent. Then if in the following tax year you only rent 1 room out, you can switch back to rent-a-room. You can decide which method suites your circumstances best each year.

However, the rules for calculating the amount of income that will be taxed can be made to work in your favour as HM Revenue & Customs allow you to use different methods for calculating the amount of income on which tax needs to be paid.

Similarly, if you know that to begin with you are below the rent-a-room limit but have been making a loss but that at some point you are likely to go over the £4250 limit and make a profit, it may be worthwhile opting out of the rent-a-room scheme in order to utilise any losses that have arisen.

Here at Advantage ATO we will look at making the most of all the rules in order for you to keep more of your share.