Government Rent-a-Room Scheme

The government Rent-a-Room Scheme is available for owner occupiers and tenants. You can rent out a room in the property you live in and receive income of £7,500 in a tax year free of tax. The limit is based on the property not on the number of rooms you rent out or the number of owner occupiers or tenants.

The basic requirements of the scheme are:

The property is your main home

You must be living in the home

You let a furnished room to a lodger. The let room cannot be used as an office or to run as a business. The lodger could work at home in the evening or weekend but not as their place of business.

The scheme can be used by a business running a Bed and Breakfast or a Guest House

I am in practice on the Isle of Wight, a tourist island, where there are many small Bed and Breakfast business. Does anyone have experience of clients running a B & B using this scheme. Even if their income is greater than £7,500 they can use the scheme and pay tax on the income above £7,500.

Does anyone know if a B & B could charge separately for a room, for breakfast and any other costs. Then for tax purposes use the Rent-a-Room Scheme for the room charge and the food as a separate business.

Information provided by Richard Spicer FIAB, Spicer’s Accounting Services

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