Rules on rent a room

Do you take in lodgers?

HMRC tightens the noose.

If you take in lodgers, you’ll be aware of RARR. Rent A Room Relief allows you £7,500 a year (or £3,750 for each joint owner of the property, whichever is less) in tax relief. This applies to rent and related payments. But take care. The government has you in its sights.

The purpose of RARR is to support landlords who let one or more rooms in their home, while they remain living there themselves. The idea is to offer them relief for extra expenses, such as laundry. Seems fair enough. But there’s a problem.

Absentee Landlords

Landlords are increasingly claiming RARR for periods when they’re not living in the property. For example, if you live within a few miles of Wimbledon, you may well take the opportunity to earn extra cash by letting out your house during Wimbledon fortnight. Or, let’s say, for a period of weeks, months, or even years, your work takes you away from home. Naturally, you might decide to let out your home. In these cases, RARR really wasn’t designed for you.

From April 6th, 2019, new legislation will apply. You’ll only be allowed to claim RARR if you stay overnight in your home ‘wholly or partly’ during the letting period. This applies for each tenant or lodger. So, whether you let your home out in an Airbnb arrangement, or you just let out a spare room to a lodger, then, as long as you’re living in your home for part of the period, you can claim relief.

The good news

It’s not all bad. Where these changes mean that you lose your RARR, you’ll still be able to claim PA (Property Allowance) – tax free income to a maximum of £1,000.

Currently, these are draft proposals, but there’s every chance that they’ll be passed into law next year.

If you’re a live-in landlord (either full or part-time), don’t leave things to chance. We’re tax advisors with an intimate knowledge of tax law for landlords. Speak to us. After all – we’re here to help.

Save money on taxes but don’t make any of those changes without checking with your accountant first. Getting it wrong could prove dangerously expensive. Remember – we’re here to help.

We’re here to help.


This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.

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