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.
So what does that mean? Say you earn 35k you could then earn £4,250 a year tax-free and it doesn't affect the amount of tax you pay?
Does it count as income for benefits though?
Sounds difficult to believe, but yes, it's tax-free income. The only snag is you can't claim expenses, such as extra heating and power, but these would have to be more than 20% (or 40%) of your rental income to make a difference (and in this case you can opt out of the scheme).
In some cases also you might lose 25% Council Tax discount, so this will increase by 33%.
I don't know about that. I suspect it will unless you keep your rental arrangements 'informal'.
Probably - practically anything counts as income for benefits, even taking out a loan!
It probably doesn't count for tax credits since TCs tend to use the same definition of income as tax.
hah itd all be tax free then eh :) Ta :)
Have something to add? Share your thoughts — no account required.
Ask the community — no account required