Tax Planning - Rent a Room Relief
Under the Government’s rent-a-room scheme, you can continue to earn tax-free income of up to £7,500 a year from letting out a furnished room in your home.
You can opt into the scheme if you earn more than this amount from renting a room and want to claim the allowance, although it may be more tax-efficient to deduct expenses from such income.
This also includes renting out your spare room through Airbnb, so you could take advantage of the allowance by letting a room in your main home to holidaymakers over short periods of time.
The relief is halved if you share the income, for instance, with your partner. If you let property that does not qualify for the scheme, a £1,000 property allowance applies instead.
There’s also a £1,000 trading allowance that applies to any income from trading, which could apply if you sell in small amounts on eBay or Etsy.
If you claim any of these allowances, you won’t be able to deduct any business expenses.
For more information about this relief or other tax planning options please do not hesitate to contact our Tax Planning team.
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