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Rent a room relief

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A change to the rules for rent a room relief has been announced in the draft finance bill, perhaps targeting property letting via Airbnb and similar platforms?

Rent a room provides up to £7,500 of tax relief to people letting out accommodation in their own homes. The current rules mean that rent a room will be available where the taxpayer lets out their whole home (for example, while they go on holiday), and they and the tenants are not there at the same time.

From April 2019, a new condition will mean that the lessor must be living in the property at the same time as their tenant for at least some of the letting period, as the government will add an additional test of ‘shared occupancy’ for rent a room relief to be available, so letting out the property while absent will no longer qualify.

The change will apply from April 2019 and is intended to make sure rent a room relief meets the original policy objective, as an incentive for the provision of furnished accommodation to lodgers.

It is of course advisable that taxpayers satisfy themselves that rent a room applies, and if not declare their rental income to HMRC (unless it is covered by the new property allowance), to avoid potential penalties if HMRC catches up with them. But one must ask the obvious question, how will HMRC check who is using the relief and when exactly they are living in the property?

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