This guidance note explains the principles of rent-a-room relief and its impact on calculation and reporting of property income for individuals.

Rent-a-room relief provides exemptions and removes the requirement to notify for low levels of rental income from a lodger in an individual’s home. It also provides a simplified method of calculating profits where income exceeds a de minimis limit.

If the gross rents are less than £7,500 (£4,250 for tax years between 1997/98 and 2015/16), the income is ignored for income tax purposes, although this limit is halved if another person is also entitled to the income. For example, where a couple own the property jointly, the limit is reduced to £3,750 each, even if the income is not split equally.

The rent-a-room scheme is designed to apply where a lodger shares the taxpayer’s own home. It cannot be applied to rooms let as an office, or otherwise for business purposes, although this would not prevent the lodger from, say, being a student with an area set aside for study.

The scheme may be used for a bed