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Make Easy Money from Home with the Rent-a-Room Scheme
It is possible to make easy money from home with the rent-a-room scheme. If you have a spare, fully furnished room that you are comfortable offering to a lodger, you will be able to earn up to £4,250 per annum completely tax-free. This makes it a great option for those who need to make extra cash in order to pay the mortgage, yet struggle to take on additional work due to time constraints. It is also useful for those who have a property that is too big for them, but don't really want to sell their home.
Why is it Now Possible to Make Easy Money from Home with Tax Incentives?
There is a growing recognition that the UK population is expanding at a faster rate than the available housing stock. To make matters worse, there is also a growing trend towards single living. The rent-a-room scheme was introduced by the Chancellor to encourage individuals to take in a lodger in order to help to resolve this problem. The Chancellor is allowing you to make an extra income of up to £4,250 before taxation needs to be paid. Any earnings above this threshold are potentially taxable unless you have a sufficient amount of your personal tax allowance available to offset these additional earnings.
Complying with the Rent-a-Room Scheme
- Primary residence. You are free to take in a lodger at any property you own, but you will not enjoy any of the tax advantages. In order to benefit, it must be your primary residence.
- Fully furnished room. A qualifying room must be fully furnished in order to comply with the rules. This may mean that some money needs to be invested on suitable furnishings before proceeding.
Provided the landlord is agreeable, it is possible to make easy money from home when the property is rented. This will help you to reduce your own rental payments.
Disadvantages of the Rent-a-Room-Scheme
- Inland Revenue forms. If you make over £4,250 and have already used up your personal tax allowance, it will be necessary to complete tax forms.
- Fully furnished rooms. It may be necessary to buy furnishings to comply with the rules.
- Inconsiderate lodgers. Whilst you will normally receive 2 references, this is no guarantee that you will get a lodger who is respectful of both you and your property.
The rent-a-room scheme is a way to make easy money from home for those who don't mind some company. There are other ways to make extra cash, including working as a registered childminder and pet sitting.
Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.
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