What To Consider Before Utilising The Rent-A-Room Relief Scheme
By Crowthorne Insurance on Feb 3, 2022 11:15:00 AM
Many people decide to take in a lodger to fill a spare room, gain some extra income, and have a little more company around the house. The rent a room relief scheme has come as a welcome change for those looking to rent out their spare rooms to lodgers. But not just anyone can utilise this scheme, and there are things you must consider before taking advantage of it. Read on to find out more.
How Does This Impact Capital Gains Tax?
As we have said, taking in a lodger can have great financial advantages. However, it can pose a significant problem for Capital Gains Tax (CGT). CGT relief only applies to the specific area of the home used for a main residence. Yet there are some exceptions to this. The exceptions exist when the owner of the property has shared the house with one lodger at one time or if you have had live-in staff members.
Rent A Room Scheme Capital Gains Tax
So, how does the aforementioned rule impact the rent a room Capital Gains Tax? Essentially, you need to follow the rule to get the most CGT relief. You may house a single lodger to be eligible for PRR relief and lettings relief. This applies to your property in its entirety.
Rent A Room Scheme Tax-Free Allowance
Under the rent a room scheme, you are allowed to have a rent a room scheme tax free allowance of up to £7500. If you earn more than this from lodgers, then you will need to pay tax on the overall amount.
Caveats To This
Because this rule applies to one lodger at one time, you would be able to take in three lodgers over a three year period but you must only have a single lodger living in your home at once. If you house two or more lodgers at once, this becomes a lot more difficult. As a homeowner, you must be careful to abide by these restrictions in order to make the most of your lodgers financially, and ensure that you are also eligible for the CGT relief on offer.
If you are considering taking in a lodger and are not sure about where this leaves you in regards to your insurance, get in touch with Crowthorne Insurance. We can help you with a range of queries and provide you with the best insurance for your circumstances. Let us know how we can best support you.
- April 2025 (1)
- March 2025 (1)
- November 2024 (1)
- October 2024 (2)
- September 2024 (1)
- July 2023 (1)
- June 2023 (1)
- June 2022 (1)
- March 2022 (2)
- February 2022 (2)
- January 2022 (2)
- September 2021 (1)
- August 2021 (5)
- July 2021 (2)
- June 2021 (2)
- May 2021 (2)
- March 2021 (2)
- February 2021 (2)
- January 2021 (2)
- December 2020 (2)
- November 2020 (1)
- October 2020 (3)
- September 2020 (2)
- August 2020 (2)
- July 2020 (2)
- June 2020 (1)
- May 2020 (2)
- April 2020 (3)
- March 2020 (2)
- February 2020 (2)
- January 2020 (5)
- December 2019 (3)
- November 2019 (3)
- October 2019 (1)
- September 2019 (4)
- August 2019 (4)
- July 2019 (7)
- June 2019 (4)
- April 2019 (3)
- March 2019 (3)
- February 2019 (1)
- June 2010 (1)
Subscribe by email
You May Also Like
These Related Stories

What Is The Rent-A-Room Relief Scheme?

What To Think About When Renting Out A Spare Room?

No Comments Yet
Let us know what you think