1. What is the Rent-a-Room Scheme?

The UK's Rent-a-Room Scheme allows you to earn up to £7,500 per year tax-free from letting out furnished accommodation in your home. This calculator helps determine your tax liability on income above this threshold.

2. How Does the Calculator Work?

The calculator uses the Rent-a-Room tax formula:

Where:

• \( Rent\ Income \) — Total annual income from room rental (GBP)
• \( £7,500 \) — Tax-free allowance under the scheme
• \( Tax\ Rate \) — Your applicable income tax rate (basic rate is typically 20%)

Explanation: Only income above £7,500 is taxable, calculated at your marginal tax rate.

3. Importance of Tax Calculation

Details: Proper tax calculation ensures compliance with HMRC regulations and helps landlords understand their net income from the scheme.

4. Using the Calculator

Tips: Enter your total annual rental income and your applicable tax rate. The calculator will show any tax due on amounts above £7,500.

5. Frequently Asked Questions (FAQ)

Q1: Who qualifies for the Rent-a-Room Scheme?
A: UK residents letting furnished accommodation in their main home. The room must be in the property you live in.

Q2: What expenses can I claim if using this scheme?
A: None - the £7,500 allowance is instead of deducting expenses. You can choose to opt out and claim expenses instead if beneficial.

Q3: Is the allowance per room or per property?
A: Per property - the total allowance is £7,500 regardless of how many rooms you rent out.

Q4: What if I share ownership of the property?
A: The allowance is halved to £3,750 if you share the income with a co-owner.

Q5: Do I need to inform HMRC about this income?
A: Only if your rental income exceeds £7,500 (or £3,750 if shared). Below this, no declaration is needed.