Review and likely overhaul of Rent a Room tax break revealed

An investigation into the effectiveness of the Rent a Room relief and other tax breaks given to private home owners who take in lodgers has begun eight months after it was revealed by the Chancellor in his 2017 Autumn budget speech. The Rent a Room relief enables home owners to earn up to £7,500 in rent tax free and was first introduced in 1992. Then, last year, an additional tax-free allowance of £1,000 was introduced for any other income earned from a home. HMRC and HM Treasury are jointly running the consultation and say they want to understand how many people are using the Rent a Room relief and also the impact it’s having on local private rental property markets. The original reason for introducing the relief was to increase the supply and variety of low-cost housing in the private sector, but the consultation document suggests civil servants are worried that it has instead fuelled a boom in Airbnb short-term booking by holiday makers and business travellers. “The government would like to hear views on whether this is an appropriate use of tax relief, or whether the relief should more explicitly support residential accommodation provided on a longer-term basis, or…