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Rent a room scheme

First of all rent, a room scheme is an optional scheme to owners, occupiers or tenants. They basically release furnished accommodation to a lodger in their main home.

This scheme is one of the best ways to improve bank balance and it is not only you enjoy the extra income from the rent, but also up to £7,500 a year is free from tax. In other words, the Rent a Room scheme is a tax relief and allows individuals to earn a set amount each year free of tax from renting out a room.

Please note that you can’t claim the Rent a Room relief if the accommodation is not in your main home, unfurnished, or is used for any business purposes. You also can’t claim the relief if the accommodation is in your UK home and it is let while you live overseas.

If you wish to charge additional services as a lodger, you have the full authority to do that such as providing meals or laundry services. If your overall income is more than £7,500 and your overall income is greater than the individual Personal Allowance, you are ought to pay some tax.