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What is Rent a Room scheme?
The Rent a Room scheme lets you earn up to £7,500 a year tax free from letting furnished accommodation in your own home, for example to a lodger. The limit is halved to £3,750 if someone else also receives income from letting in the same home.
Why it matters to landlords
It applies only to your main home, not to a separate buy-to-let. Below the limit it is automatic. Above it, you can either pay tax on income over £7,500 or pay tax on profit after actual expenses, whichever suits you.
A lodger is not the same as an assured tenant, so much of the tenancy law covered elsewhere in this glossary does not apply.