Take advantage of the rent a room scheme
Although we all aspire to own vast portfolios of luxurious property, the fact is many of us don’t. However, you may rent on a smaller scale. Renting out a room in your house is becoming increasingly…
5 Minute Read
Although we all aspire to own vast portfolios of luxurious property, the fact is many of us don’t. However, you may rent on a smaller scale. Renting out a room in your house is becoming increasingly popular, and it’s a nifty little way of earning some extra money. By signing up to the rent a room scheme you can enjoy extra income from rent and also benefit from up to £4,250 tax free.
How it works
Rent a room applies only to owner occupiers/landlords who receive rent from letting furnished accommodation in their main home. Best of all, if your income from this letting does not exceed £4,250 you will be exempt from tax charges on your profit. The tax exemption is automatic, so if your profit does not exceed £4,250, you can sit back and watch the money roll in.
What if my income exceeds £4,250?
If your income from rent a room exceeds £4,250 you must complete a tax return, and you can choose to pay tax on either:
- Your profit from the property
- You gross income (before tax)
But don’t worry, we can help you every step of the way. If your income exceeds £4,250, Go SimpleTax and file your tax return online, the easy way.
Responsibilities of a Landlord
Becoming a landlord brings with it certain responsibilities. If you rent out a room in your home, you’re responsible for:
- Repairs and maintenance
- Gas safety certification (annually)
- Rental agreement with your lodger
- Protecting your tenants’ deposit if your tenant has an assured shorthold tenancy
Why should I sign up for rent a room?
Clearly, the biggest advantage of the rent a room scheme is additional rental income, and the added bonus of £4,250 absolutely tax-free. However, there is one downfall. The rent a room scheme does not cover ‘wear and tear.’ By this, we mean any wear and tear in the property, such as a broken boiler or replacing fixtures and fittings; you will not be able to deduct any of these expenses under the rent a room scheme. It’s up to you whether you perceive the costs of wear and tear to outweigh the additional income from rent, but this is certainly a great opportunity to earn some extra cash.
Looking for help submitting your tax return as a landlord? Try GoSimpleTax today.
Trusted by over 10,000 subscribers
You don't need to be an expert to complete your self assessment tax return.
Managing your finances has never been so easy.
Start you self assessment tax return today for free.Get Started
How long must you keep financial records for when you’re self employed?
03 Aug 2021
What if you miss the Self Assessment tax return filing deadline?
21 Jul 2021
How much tax will you pay if you take a second job?
19 Jul 2021
How GoSimpleTax Works
Simply register for free with your full name and email address.
Select Your Income
Select the income you receive and follow the hints and tips for potential tax savings.
Validate Your Information
Validate your personal information and submit directly to HMRC to get confirmation in just seconds.
Work Anywhere, With Any Device
Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.
GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.
"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"
"Easy to use and value for money. Everything you need to do your tax."
"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."