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Rent a relief was introduced back in 1992 to increase the supply of housing across the country, encouraging lettings of rooms to students or people working away from home during the week.
Rent a room relief currently allows that you can earn up to £7,500 or £3,750 if let jointly, tax free when letting out a room in your only, or main residence.
With the increase of Airbnb rentals and similar this has meant that people renting out under these platforms are making use of this relief. The government have realised that they are losing out on tax revenue through a relief being used for something it was not intended for.
They did propose to add an additional rule to this relief to ‘fix’ this problem and this was included and consulted upon in the draft legislation destined for the Finance Act 2019.
The additional rule was that a ‘shared occupancy’ test, where during the letting term there would have to be a period of shared occupancy with the owner of the house. This was widely challenged as being very difficult to prove. So to maintain the simplicity of the system this was not legislated on and whole house lets through Airbnb and similar are still ok for now!
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