Rent-A-Room Relief

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The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else. You may let out as many rooms as you want. As of 2018, you can let out your home as long as the room is furnished and also if the ‘letting activity amounts to a trade, for example, if you run a guest house or bed and breakfast business, or provide services, such as meals and cleaning’. (Gov.UK, 2018).


However, you can not let out a room if;


•‘The room is not part of your main home when you let it


•The room is not furnished, used as an office or for any business - you can use the scheme if your lodger works in your home in the evening or at weekends or is a student who is provided with study facilities


•The room is in your UK home and is let while you live abroad’ (Gov.UK, 2018)



The tax-relief threshold of £7,500 for an individual or £3,750 per partner is calculated from the total gross receipts. Gross receipts include any rental income before expenses or any other income for services provided to the lodger such as food and cleaning (that the lodger pays for).


You usually count your gross receipts for a tax year e.g. the 6th April 2017 to the 5th April 2018. HMRC have proposed a change to the legislation conducting new tests that must be satisfied in order for income to be eligible.


Therefore, the lodger must prove they are currently occupants of the property they are lodging.


For example, if a home owner goes on holiday for two weeks and lets out their property to a family, this is not legible for rent-a-room relief as there is no shared occupancy for the period that the tenant is staying there.


Although there is still tax relief when there is an element of shared occupancy. E.g. ‘An individual rents a room to a student during term time. The landlord goes on holiday for a week during the rental period. The receipts would be eligible for rent-a-room relief as there is shared occupancy for part of the period of rental. This change will effect the income tax years as of the 6 April 2019.


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