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How to take advantage of the rent a room scheme

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You can rent out a room in your house to a lodger and get up to £4250 in rent tax free each year in what is known as the rent a room scheme. This guide will help you to do this to ensure you are doing everything properly and according to the rules of the scheme.
What you'll need: 
A spare room in a house or property you own or rent
A Lodger
1: 
The scheme only applies to the property which you live in, you can either own the home or be renting it, if you are renting you need to check you are allowed to rent out a room under your lease.
2: 
Advertise your room. There are lots of ways you can find a lodger looking for a room, place an advert in your local paper or on many of the flat-sharing websites such as mondaytofriday.com.
3: 
Agree terms with your lodger. It will make life easier for al is you make it clear and have an agreement from the beginning about what facilities the lodger can use and what you both expect from each other. The scheme also allows you to provide other services such as laundry and providing meals.
4: 
As part of the scheme you can deduct all expenses related to the renting of your room, so make sure you keep a record of everything.
5: 
You can choose to opt in or opt out of the scheme. If you choose to opt in and the yearly rental income excluding expenses is below the threshold you don't need to do anything. If it is above the threshold, you will need to tell the HMRC by filling in a tax return. If you opt out you must declare your earnings on your tax return.

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