Rent-a-Room tax limit 'is outdated'

Monday, November 16th 2009

The current tax limit on the government's Rent-a-Room scheme is outmoded and should be overhauled.

This is according to Matt Hutchinson, communications director at SpareRoom.co.uk, who echoed a recent call by the National Landlords Association for the £4,250 annual tax threshold to be raised.

Currently, homeowners who let a room to a lodger are exempt from income tax up to this amount - a limit that has not been raised in 12 years in spite of average rent increases.

"With so many people facing arrears and repossessions and just worried about finance generally, renting out a room is often the single biggest step people can take to bring in a bit of extra income," Mr Hutchinson commented.

Last month, Halifax released the findings of a study showing that lodger numbers in the UK have soared by 23 per cent in the last three years and that 200,000 property owners have let a room over this period.

There are about 970,000 lodgers at present, with 55 per cent of new landlords renting out a room in this way for financial reasons.