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Rent Out Your Room – Common Questions

Rent out your room may be something you are thinking about if you are looking for different ways to make money. However, you probably have a few questions you need answered before you go ahead with this plan. Below, we aim to answer some of the most common questions regarding renting out a room.

How much money can I make if I rent a room out? Unfortunately, there is no way to give a specific answer to this question without knowing the details of your property and the room you have available. The best thing to do is to take a look at rooms that are similar to yours and see how much money they are going for. Factors such as room size, location and facilities all impact how much money you make. Do I need to pay tax? Yes, you do, but you do have choices of how and when. There is a Rent a Room scheme in place in the UK that means that you can earn up to £7,500 tax-free from renting out a room. Once you earn more than this, you need to start paying tax. However, if you choose not to opt into the Rent a Room Scheme, then you can offset the income from renting your room against expenses associated with it when you complete your self-assessment tax return.

By way of example, say you earn £10,000 a year from a renting a room and have expenses associated with it of £2,000 and you are a standard rate tax payer, i.e. 20% band.

The you have 2 key choices for the Rent a Room Scheme:

1. Opt into the Rent a Room Scheme –

Rent a Room Scheme

Opt out of the Rent a Room Scheme

Rent a Room Scheme

The above indicates you would be better to opt into the Rent a Room Scheme. But consider another situation, whereby you have expenses of £8,000.

2. Opt into the Rent a Room Scheme –

Rent a room scheme

Opt out of the Rent a Room Scheme

Rent a room scheme

In this case, it may be better to opt out of the Rent a Room Scheme, but if does come down to your personal circumstances. Quite simply, if your expenses are greater than £7,500 then you are better off opting out of the Rent a Room Scheme, but if your expenses are less than £7,500 the you are better off opting into the Rent a Room Scheme. Either way it’s important to be clear, honest and keep good records of your transaction history related to the room rental.

If in doubt, you should contact an accountant to assist with your specific circumstances. You can also email any questions to [email protected] Ltd or contact our specialists at bellfolio.com for free. Can I rent out a spare room in a council property? You can, however, do note that there could be a weekly tax deduction on any income you make, which is usually around £14 per week.

If you are ready to rent out your room, Bellrooms Ltd can assist. We bring landlords and tenants together via our easy-to-use website. Just fill in your details and we post your listing immediately. Anyone that is interested can get in touch with you via the contact form or the telephone number you input. To get started, head to https://www.bellrooms.com/.