Rent-a-room relief

AAT today responded to the Government’s Call for Evidence on rent-a-room relief.

Rent-a-room relief provides income tax relief for those letting out furnished accommodation to incentivise individuals to make spare capacity in their homes available for rent. It is currently set at £7,500 per annum.

The Government announced during the 2017 Autumn Budget that they wanted to establish how rent-a-room relief is used and to better target it towards longer term lettings.

In response, AAT has called on Government not to introduce additional complexity to the tax system, to consider the wider benefits to both landlords and renters and to consider the tax arrangements of digital platforms.

Phil Hall, AAT Head of Public Affairs & Public Policy, said:

The simplicity of rent-a-room relief has made it attractive so imposing restrictions based on the success of short term and holiday lettings obviously risks damaging the sector.

Restrictions will reduce accommodation availability and choice as well as reducing the incomes of many people who find this one of the few ways they can supplement their earnings in a relatively simple and tax efficient manner.

In responding to issues around costs, Phil Hall added:

It’s not clear why the Government is so concerned about people renting their spare rooms out for holiday and short-term lets but if the costs of this relief are the main driver then this appears to be misguided.

Instead of looking at individuals who just want to supplement their income by renting out a spare room for a few nights a year, Government would be better advised to direct its attention to the questionable tax arrangements of some digital platforms, with Airbnb a particularly high-profile recent case.