Make the most of the Rent a Room advantage this Wimbledon
Thursday 31 May 2018, Wimbledon fortnight is an ace opportunity for local residents to benefit from an increase in visitors attending the All England Lawn Tennis Club for the tournament. ICAEW explains how living in the capital can result in scoring an extra £7,500 in tax-free earnings.
Sarah Ghaffari, ICAEW’s Tax Faculty’s Technical Manager, explains: “The Rent a Room tax exemption allows any household to earn up to £7,500 tax free annually by renting out a room in their main residence. Wimbledon, and other large sporting events, provide a perfect opportunity to rent out a room as sports fans race to the capital to cheer on their favourite players. The tax exemption is automatic, if the rental income is lower than the threshold. If you exceed the £7,500 limit, you will need to file a tax return.
“If you take in a lodger, you must tell your mortgage lender or landlord and your buildings and contents insurer to make sure you aren’t breaching the terms of your mortgage, lease or insurance. Your insurance company may need to arrange extra cover.”
Can you get the advantage?
- You are only able to let out your spare room if it is fully furnished and in your principal home
- You can only let out the room for residential purposes and not as office space or for any business
- The scheme does not apply if your home is converted into separate flats that you rent out, this will then become rental income which will need to be declared
- If you provide meals and laundry services and make an additional charge for these, you will need to add this income to the rent to work out the total receipts
- If any income made from renting out a room exceeds £7,500, you will need to pay tax on the excess
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