Draft Finance Bill 2018-19 legislation published today proposes that rent-a-room relief¹ stay in place but, from 6 April 2019, it will be available only where the landlord is in occupation for some or all of the time that they are letting their home.  This means that when a family goes on holiday and lets their whole house in their absence, any income will no longer be eligible for rent-a-room relief.  However, the far more common use of the relief by those letting spare rooms to lodgers or short-term holiday guests will not be affected.

This announcement follows a call for evidence earlier this year by the Treasury. The ATT responded to the call² based on the results of a joint survey of both ATT and Chartered Institute of Taxation (CIOT) members which received almost 700 responses. Members responses to this concern were split, with 52.6% of respondents agreeing that the relief should remain available for holiday letting, and 47.4% feeling it should be restricted to residential lets only.

Jon Stride, Co-chair of ATT’s Technical Steering Group, said:

“Rent-a-room relief is a popular and valued incentive for people with spare rooms in their homes to take in a lodger. We are pleased that it will remain mostly intact.

“We did not want to see any more complexity in this relief, which is intended to keep people out of the self-assessment tax system.   One of the areas where we had called for more guidance was whether or not the relief was still available when the landlord was absent on holiday during the letting. This new legislation will put the matter beyond doubt.

“Other options for reform had included restricting the relief to letting of more than 30 days.  This would have been complex to police and, without further complications, could have excluded those who provided accommodation during the mid-week period only.  We also had concerns that any restrictions on the length of stay would have restricted use of the relief where people open up their homes to visitors during events such as the Edinburgh Fringe or Cowes Week.  This may have discouraged residents from providing additional accommodation during times of high demand.