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Room in hand

11 February 2009 / John Newth
Issue: 4193 / Categories: Comment & Analysis , Rent-a-room , Income Tax

The current and continuing attractions of rent-a-room relief

KEY POINTS

  • Rent-a-room relief is a genuine tax break.
  • The relief covers rent of up to £4 250 a year.
  • Expenses cannot be claimed with the relief.
  • Claim the relief via the self-assessment return.
  • Bed and breakfast income is covered.

Based on current bank and National Savings investment interest rates of about 1% one would need an investment of £425 000 to produce annual interest of £4 250 and even then the interest would be subject to tax in the hands of a taxpayer.

Those who are seeking to increase income during the current credit crunch might well consider the rent-a-room scheme which can yield annual tax-free income of £4 250.

This is equivalent to £7 083 before tax for a higher-rate taxpayer and £5...

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