Rent a Room Scheme

If a landlord has one or more lodgers living in their home they will be eligible to use the HMRC Rent a Room Scheme.

To qualify for the HMRC Rent a Room Scheme a landlord must have at least one lodger paying to live in the home and their living quarters must not have a separate front door, kitchen and other facilities.

This scheme entitles homeowners to a flat deduction of £7,500 per year against their rental income which ultimately means if your income from a lodger is £7,500 or less there are no taxable rental earnings.

If landlords do choose to opt into this scheme they do not necessarily need to keep a record of expenses incurred from having a lodger and they may not even need to fill in a tax return, as long as receipts are below the tax free thresholds for the scheme.

The tax privilege is automatic therefore if receipts are above the threshold landlords will need to complete the property pages of their tax return.

As a resident landlord they are solely responsible for keeping the property safe and in working order.  The tenant/lodger will not have the right to challenge the agreed rental amount.  Landlords can also give less notice to end the tenancy than if they were letting out the whole property.