Changes to Rent-a-room relief

Here we discuss the changes to regulations to a taxpayer of renting all or part of their home and why they are being implemented.

The rent-a-room relief (RARR) allows a taxpayer to let all or part of their home to a lodger tax free up to £7,500 each tax year. HMRC is looking to place some further restrictions on this as they believe the relief isn’t being used for its original purpose; for people who took in lodgers in their home.

The relief appears to be increasingly claimed by people who let their homes whilst being temporarily away from it – Airbnb type lettings.

From April 2019 HMRC will introduce changes so RARR can only be claimed where any temporary lets coincide with actual occupancy in some part. So as long as a taxpayer stays in part of their home for at least some part each tenant is in occupation the relief can continue to apply.

Draft legislation has been issued and the consultation process ran till 31st August 2018. Further details will be available when the Finance Bill 2019 is published.

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