Starting a new business? Get 40% off our accountancy services for 3 months! 😎
If an owner-occupier or tenant has a lodger, up to £4250 could be received tax free. The Rent a Room scheme enables anyone who is renting out a room that is furnished and in their main residence to earn £4,250 tax free during the year. Other income isn’t taken into account for the purposes of the scheme.
The tax free amount applies to gross receipts from the renting out of a room in your home, which is the amount before any expenses are deducted. A lodger will pay to rent a room in a person’s main or family home, sometimes receiving meals and sharing family rooms. If the house has been converted into flats, the scheme is not applicable. However, the scheme does apply if you let out a furnished room or a whole floor of your home to a lodger, providing it is furnished.
If a person is letting out furnished accommodation jointly with someone else, £2,125 will be allowed tax free for each person. If the rent received is more than £4,250, or other services like cleaning or meals are charged for and the total amount is more than £4,250, a self-assessment tax return must be completed.
It is important to work out whether it is beneficial to join the Rent a Room scheme, or complete a tax return providing details of rental income and expenses. This is dependent on receipts that include rent and other services, and the amount of expenses incurred.
Subscribe to our newsletter to get accounting tips like this right to your inbox
This month we spoke to Joe, Managing Director of Invisible Dragon! Invisible Dragon | Twitter Hey Joe! Tell us about your business I’m…
Read MoreThere are all sorts of reasons why you’d need a car or work vehicle if you’re self-employed. From tradespeople to healthcare workers,…
Read MoreThis month we spoke to Steve Kennedy, Sales Admin Assistant at The Accountancy Partnership! Give an overview of the duties, functions and…
Read MoreThe number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?
Please contact our sales team if you’re unsure
It is unlikely you will need this service, unless you are voluntarily registered for VAT.
Are you sure this is correct?
Call us on 020 3355 4047 if you’re not sure.
You will receive our bookkeeping software Pandle for free, as part of your package.
You can use this to complete your own bookkeeping, or we can provide a quote to complete your bookkeeping for you.
Please select and option below:
Call us on 020 3355 4047 if you’re not sure.