Have you ever wondered if there was a way to earn some extra money, tax free? If you have a spare, furnished bedroom in your house then there is a very simple way to do so.
There is a scheme, the Rent a Room scheme, that allows you to earn up to £7,500 of tax free money, just by letting a furnished room or floor of your house. This number is halved if you share the income with a partner.
There are allegedly 19 million bedrooms empty, and with the UK currently being in the middle of a housing crisis with house prices rising and not enough houses being built, there are so many of us that could benefit from this scheme.
To be eligible to opt in to the Rent a Room scheme, all you need is to be a residential landlord, or run a guest house or bed and breakfast.
If you do let a room or floor in your house and earn under the threshold of £7,500, then the tax exemption is an automatic process, however if you earn over this threshold, you will need to complete a tax return. The threshold for this scheme has increased by 76% since April 2015, rising from £4,250 in the previous tax year, allowing many more people take advantage of this scheme.
To claim your allowance of tax free earnings, you can opt in to the scheme, but you do have the choice to opt out if you wish. If you do choose to opt out, you will have to record your income and expenses in your tax return on the properties page.
So, if you have a spare room in your house, why not let it out to a student or lodger to earn yourself some tax free money. Who knows, you might even make some new friends out of it too!