21 May EARN MONEY FROM YOUR HOME AND DRIVEWAY
In these difficult economic times, one way of introducing an income from your home, is to consider having a lodger. You can receive up to £4,250 a year, tax free (£2,125 if letting jointly), under the Government’s ‘Rent a Room Scheme’.
The ‘Rent a Room Scheme’, is an optional scheme that lets you receive a certain amount of tax free ‘gross’ income, (receipts before expenses,) from renting furnished accommodation, in your only or main home.
You can choose to take advantage of the scheme, if you let furnished accommodation in your only, or family home, to a lodger. Your only, or family home, is the one where you/your family live for most of the time. A lodger, is someone who pays to live in your home, sometimes with meals provided and who often shares the family rooms.
A lodger can occupy a single room, or an entire floor of your home. However, the scheme does not apply, if your home is converted into separate flats, that you rent out. In this case, you will need to declare your rental income to HM Revenue and Customs (HMRC) and pay tax in the normal way. Nor does the scheme apply, if you let unfurnished accommodation in your home.
If you are both letting furnished accommodation, in your joint home, you will each be entitled to receive, half of the allowance (up to £2,125 for 2011/2012 tax year), without paying tax. If you charge for additional services, you will need to add the payments you receive, to the rent, to work out the total receipts. If you get more than £4,250 a year in total, you will have to pay tax, even if the rent is less than that. For more information, visit www.direct.gov.co.uk.
If you are thinking about a ‘Rent a Room Scheme’, make sure you set out the ground rules and obtain a Tenancy Agreement (you can purchase the contract for £5, from Residential Landlords Association – visit www.rla.org.uk. ). It is also important to inform your Building Society, Bank and Building Insurance Company, that you are considering the ‘Rent a Room Scheme’, before letting.
Another way that your home could earn money, is to consider renting out your driveway, or unused garage, particularly if you live near a City Centre, rugby, football stadium or train station, where demand for parking is high. You could earn around £100 to £150 a month, by hiring out a private space, within walking distance of the City Centre. It is worthwhile registering your space, for free on a website such as www.parkatmyhouse.com. Be careful that your hirer’s car, does not have a dripping oil leak, when parking in your driveway. If you are letting your garage, you may require your Building Society’s consent and you will also need to inform your Building Insurance Company, of your intentions.