Rent a Room Relief Changes

Rent a Room Relief changes are due to be implemented from April 2019. In particular a new test is to be added to the qualifying criteria for rent-a-room relief.

The test will require that the individual or individuals in receipt of income – the home owner(s) – will need to share occupancy of the residence in question with the individual whose occupation of the furnished accommodation is generating the receipts – the lodger.

In their notes advising the Rent a Room Relief changes HMRC says:
Rent a room relief provides Income Tax relief for those letting out furnished accommodation. It was introduced in 1992 to encourage individuals to make spare capacity in their homes available for rent. The government intended this to increase the quantity and variety of low-cost rented accommodation, giving more choice to tenants and making it easier for people to move around the country for work.

Rent a room relief presently gives relief from Income Tax for up to £7,500 of income to individuals (shared in the case of joint owners) who let furnished accommodation in their only or main residence. This makes it a very useful tax relief for a significant number of people and the changes are really only a fairly obvious clarification of the rules.

Making a declaration on your tax return for Rent a Room Relief  is not complicated although taxpayers should be aware that there is a choice on how to declare the income if this goes above the £7,500 threshold. Please do get in touch of you need advice on this or any other tax issue.