The Rent a Room Scheme
If you’re letting furnished accommodation in your own home to a lodger you
should be able to benefit from the Rent a Room scheme.
The scheme lets you earn tax-free income of up to £4,250 a year (£2,125 each if
letting jointly with another person) from letting rooms in your home. You’ll have to
pay tax on anything over £4,250.
If you earn this amount or less, the tax exemption is automatic. This means you
don’t even need to complete a tax return, unless you already do for other reasons.
If you earn more than the threshold you’ll have to complete a tax return and
choose to opt into the scheme to claim your tax-free allowance. Alternatively, you
can opt out and pay tax on the full amount.
