From 6th April 2019 rent-a-room relief rules are changing. The relief will no longer be allowed unless you occupy part of your home for some or all of the time that you’re renting out another part of it.
The Rent-a-Room Relief (RARR) scheme was put into place to allow anyone who rents a room in their home to receive £7,500 tax free, or £3,750 for each joint owner, per year. The exemption applies to payments for rent and other related payments, like laundry.
However RARR is now being increasingly claimed by people who are letting out their homes while they aren’t there, like Air BnB rentals. HMRC are unhappy with this as the original purpose of the relief was for people who take in lodgers.
The new rules mean if you rent your home out on Air BnB you must be present for in your home and use it as sleeping accommodation for at least some of the period you are letting the property out.
If the new rules mean that RRAR will no longer apply to you, you can still take advantage of HMRCs property allowance, which allows you to earn a maximum of £1,000 tax free from property each year.