Rent a Room Relief Print

Rent a Room relief was introduced to encourage those with spare room in their homes to rent it out as residential accommodation. Gross rents of up to £7,500 are exempt from tax provided certain conditions are met.

The main conditions are:

  • The rent is received for the use of furnished accommodation in a qualifying residence.
  • A qualifying residence is the lessor’s only or main residence at any time during the period of occupation by the tenant.

Where more than one lessor receives rent in respect of the same residence, the exemption is apportioned between the lessors.

In the event that the gross rent exceeds the above exemptions, the lessor may elect for the excess to be treated as the relevant rental income chargeable to tax in the year.

An election may be made for the exemption not to apply for a year of assessment, which may be beneficial in the case of a loss arising for the relevant year.

Rent a Room relief also covers situations where individuals rent out rooms in a guest house, Bed and Breakfast establishment, or similar, provided that the property is the individual’s main residence.

Participation in the Rent a Room scheme should not normally lead to a CGT liability on the eventual disposal of the home.

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