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Rent a Room Relief

If you rent a room out in your only or main residence, you can claim upto £7,500 per year tax free income, known as Rent a Room Relief.

A new "shared occupancy clause" is to be introduced which specifies that the owner be resident in the property, and physically present, for at least some part of the letting period.  This new clause should ensure that the relief is returned to it's original purpose.  This was to incentivise the letting of spare rooms and to ease the housing crisis.

This change in the rules is designed to prevent property owners from getting tax free rentals on what is essentially a bed and breakfast or holiday let business eg. AirBNB.  Many property owners have been renting their homes out to holidaymakers, whilst they move out, and then claiming Rent a Room Tax Relief.

HMRC gives a couple of examples on how they expect the new rules to work.  

Firstly a Landlord lets their home to a student for a specific period of time.  The Landlord is occupying the house, along with the student, but then takes a holiday for a week.  This income qualifies for the tax free allowance as there is a shared occupancy for part of the rental period.

Secondly a Landlord rents out their home, and moves out, say for example during a major golf tournament being held near to their home.  As there is no shared occupancy the rent received is fully taxable and would not qualify for Rent a Room Relief.