Renting a room
If you already have a lodger or are thinking about letting furnished rooms in your home, you can receive up to £4,250 a year tax-free (£2,125 if letting jointly). This is known as the Rent a Room scheme.
The Rent a Room scheme is an optional scheme that lets you receive a certain amount of tax-free 'gross' income (receipts before expenses) from renting furnished accommodation in your only or main home.
You can choose to take advantage of the scheme if you let furnished accommodation in your only or family home to a lodger. You’re only or family home is the one where you/your family live for most of the time. A lodger is someone who pays to live in your home.
A lodger can occupy a single room or an entire floor of your home. However, the scheme does not apply if your home is converted into separate flats that you rent out. In this case you will need to declare your rental income to HM Revenue & Customs (HMRC) and pay tax in the normal way. Nor does the scheme apply if you let unfurnished accommodation in your home.
Lothian Homes 4 Let can assist you with this process to give you peace of mind. We can have an initial meeting with you to discuss your options and how we can help you through the process. There are advantages and disadvantages of the scheme – we can help work out what is best for you either as a lodger or if you have a room to rent in your home.