Don’t Touch Rent-a-Room Relief, Industry Body Urges Government

The Association of Accounting Technicians (AAT) is urging the Government to leave rent-a-room relief alone, following a call for evidence on the issue.

Rent-a-room relief provides Income Tax relief for those letting furnished rooms within their homes, incentivising individuals to make space for private tenants. The limit is currently set at £7,500 per year.

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

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

Phil Hall, the Head of Public Affairs & Public Policy at the AAT, says: “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 response to issues around costs, Hall continues: “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.”

AAT’s full response to the Government’s call for evidence on rent-a-room relief can be read here.