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The Rent a Room Scheme lets you earn up to £7,500 per year tax-free from letting out a part of your own home. This is also known as the rent a room relief as it’s a great way to become tax efficient.
Yes – as long as you live there (at least most of the time), then you can use this allowance for Airbnb as well.
In this case that income it’s tax-free – automatically.
So, you won’t need to do anything. You only have to submit a tax return if you go over your £7,500 tax-free allowance.
If your gross receipts are more than 7,500, you have the option to either:
In both cases, you’ll need to complete a tax return.
You can also choose to opt out of the scheme on your tax return by simply recording your income and any associated expenses on the property pages of your tax return.
The deadline to tell HMRC you want to opt out is 31st January (after the end of the tax year.)
🚨 Other things you should know about tax and the Rent a Room scheme:
You normally can’t claim a loss if you use the Rent a Room scheme.
However, there is a workaround (don’t tell HMRC we told you🤫):
Your property may be considered a House in Multiple Occupation (HMO) if you let rooms to more than two people. HMOs require:
⚠️ Running an unlicensed HMO is illegal and can result in hefty fines from your local council. ⚠️
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