The new rent a room scheme has begun! But did you even realise it had started? Don’t worry – we’ll explain everything.
If you have a spare room in your house, you could stand to benefit from the government’s ‘rent a room’ scheme. The new government scheme came into place in April 2016, and it is meant to help people who rent out their room to lodgers keep more of the money they make in rent in their pockets.
Rent a room allowance
The scheme raises the tax-free allowance that resident landlords enjoy on their rental income. From April, people renting out a room in a home they live in will be able to earn up to £7,500 in rent before they have to start paying income tax.Best of all, the exemption is automatic – your landlords won’t have to fill in any forms or have any boring phone calls with HMRC.
Effects of the rent a room scheme
The new tax-free allowance on the rent a room scheme is important because it raises the allowance above the UK’s average room-rental price – meaning many resident landlords will not pay any tax at all on their rental income.
At the time of legislation, the average price for a UK room outside London was £6,071 – significantly below the allowance. Removing the snagging barrier of taxation could be the final push many people with spare rooms need in order to throw open their doors and welcome a friendly lodger.Even in London, where the average room cost £8,335 in the same period, landlords stand to see a lot more money in their pockets in 2016 when compared to 2015. If your rental income is higher than the allowance, you’ll have to fill in a tax return. B&B and guesthouse owners can claim the allowance, too!
How to rent out my spare room
If you have a spare room you’ve been thinking about letting, there’s no easier way to do it than by making an ad on EasyRoommate.co.uk. Why not make your advert and start earning up to £7,500 tax-free income today!