The Rent-A-Room Scheme and Extensions

I am extending my home to build a self-contained flat at the rear of my property. I will be looking to rent this out after April for £450 per month. Can I apply the rent-a-room scheme on the income I receive from this extension?

1st April 2010

The rent-a-room scheme only applies to the letting of furnished rooms for residential purposes in the taxpayer's home. If rooms are let as an office or for any other business purpose a claim cannot be made for rent-a-room relief. 

It is highly unlikely that you would be able to claim this relief if the extension is a self-contained unit.  HM Revenue & Customs would need to be satisfied that the extension formed part of your main residence and was not a separate residence.  They would generally only allow a claim where a property has been divided if the division was only a temporary one.  This would be determined by reviewing whether structural alterations would be necessary to reverse the division and how long the residence has been divided into separate accommodation. Other factors that will be considered are whether or not the apartment has a separate postal address and door entry and whether it is metered separately for mains services.

If you are uncertain as to whether rent-a-room relief will be available on your property, you should seek advice from your local TaxAssist Accountant.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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