The rent-a-room scheme is a set of special rules designed to help homeowners who rent-a-room in their home. The current tax-free threshold of £7,500 per year has been in place since 6 April 2016. Homeowners using this scheme should ensure that rents received from lodgers during the tax year do not exceed £7,500.
The tax exemption is automatic if you earn less than £7,500 from qualifying rentals. The relief applies only to the letting of furnished accommodation and applies when a bedroom is rented out to a lodger.
HMRC issues specific guidance for individuals who seek to use rent-a-room relief where rooms in private homes are let as office accommodation. HMRC is clear that such claims do not qualify for rent-a-room relief and should be refused.
This does not apply to genuine lodgers such as students who are provided with study facilities in their lodgings. In such cases, HMRC would not want to deny relief. For example, where a lodger is provided with a desk which he or she uses for work or study.