In relation to people who let furnished rooms in their homes, there is a ‘rent-a-room’ relief. The relief applies to owner occupiers and tenants. Gross annual rents which do not exceed £7,500 are exempt from income tax; those who receive gross annual rents in excess of £7,500 can choose between paying tax on the excess (but forgoing relief for allowable expenses) or on the actual profit in the usual way. If someone else receives income in such circumstances when the property is the individual’s only or main residence, the individual’s rent-a-room limit is reduced by half to £3,750.
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