We are celebrating this festive time of year with a Christmas Selection Box of different tax reliefs and exemptions. As it is the time for giving and sharing, we hope that our "Box" will save you pounds rather than adding them!

C-H-R-I-S-T-M-A-S

R is for Rent-a-room relief

Rent-a-room relief is a relief against rental income.

  • An individual may rent a room in their own residence, and provided that the conditions are met and rental income does not exceed the specified limit (currently £7,500), all rental income is tax-free.
  • The accommodation available for letting must be furnished and at some time in the tax year be part of the individual's only or main residence in the UK.
  • "Residence" means,

    • A building or part of a building which is occupied or intended to be occupied as a single residence, or
    • a caravan or a houseboat.
  • An election can be made to dis-apply the rent-a-room treatment.
    • Where an election is disapplied, the rental profit or loss is calculated as normal property income, after deduction of expenses. This might be helpful if there is a loss and other profitable property income in the year.
    • The election can be made to be taxed on the excess of receipts above the normal relief entitlement. 
  • Rent-a-room relief is not applicable when a property is let to a business, or let as an office or for storage.

Rent a room FAQs:

Can I claim Rent-a-room relief on my Airbnb? Can 'superhosts' claim Rent-a-room relief? 

  • Yes, you should be able to claim the relief provided that you meet the various qualifying conditions for it.

    • If your rental income is £7,500 or less, then simply claim the relief and your rental profit is then covered by the relief.
    • If your rental income exceeds £7,500, you may claim the relief as a deduction from your rental income. You cannot also claim actual expenses.
  • You cannot claim Rent-a-room relief as well as the £1,000 trading and property allowances.

Can I claim Rent-a-room relief on my self-contained annex?

  • No, the relief cannot be claimed for letting a permanently separated part of a building, such as a flat or annex.
  • A building which is temporarily divided into multiple residences may be treated as a single residence but a self-contained annex is unlikely to qualify as temporary.

If I claim Rent-a-room relief can I claim a deduction for expenses such as heat and light for the rental bedroom?

  • No, because you are claiming the relief to ensure the income is not taxable you cannot claim any relief for expenses. 
  • You can only claim expenses if you dis-apply the relief completely in a particular tax year. Even if you elect to be taxed on the excess rents over £7,500 you cannot claim any expenses.

Our selection box so far...

C - H - R - I S T M A S

Useful resources:

Rent-a-room relief 

Adviser guide: Property profits and losses

Property profits & losses: toolkit (2019/20)

At a glance guides:

Allowances: Trading and Property

Property Profits and Losses

Replacement of domestic items relief

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