In the current economic climate, money is tight and everyone is watching their spending. One way of increasing your income is to rent out a room in your home.
The Governments Rent a Room Scheme allows you to receive up to £4,250 per year tax-free from letting out furnished accommodation in your home, it also won’t affect the amount that you receive in Child Tax Credit or Working Tax Credit. This threshold is halved if you share the income with your partner or someone else.
A lodger can occupy a single room or an entire floor of your home, but the scheme does not apply if your home is converted into separate flats that you rent out; in addition the scheme will not apply if you let your accommodation in your home unfurnished.
The 'Rent a Room Scheme' allows you to have much more control over the tenancy than you would with full tenants who sign a Tenancy Agreement. Unlike tenants, lodgers do not have security of tenure and have no right to stay on if you give them notice to leave. It’s also much simpler to remove unsuitable lodgers than it is tenants.
Although not essential, we recommend that you create and ask your lodger to sign a Rent a Room Agreement.