Call for 'lodger' tax breaks
A housing charity has called on the Government to give greater tax breaks to people who rent out rooms in their homes.
Shelter said the level of rental income homeowners were able to receive before they had to pay tax under the Rent a Room scheme was too low, and was putting people off taking in a lodger.
It said the current threshold of £4,250 had not been changed since the scheme was introduced in 1997, despite the fact that average rents had soared by more than 110% since then.
The group is calling for the threshold to be raised to £9,000 a year, which it estimates would cost the Treasury only around £5 million annually.
It also wants the Government to run a publicity campaign to alert people to the scheme.
Kay Boycott, director of policy and campaigns at Shelter, said: "The current threshold is far too low and is likely to put people off letting out rooms due to the need for completion of a tax return and payment of income tax on the rental income.
"In the current economic climate, many homeowners are battling to meet their mortgage payments and many are looking for options to maximise their income.
"If the Rent a Room threshold was higher and the scheme better publicised, it could prove a real incentive for people to take in a lodger, and the take-up of Rent a Room opportunities could increase."
She added that increased take-up of the scheme would also help to ease pressure on housing supply, as it would lead to more efficient use of existing housing stock.
Matt Hutchinson, director of house share website Spareroom.co.uk, said: "The Rent a Room scheme has proved a vital lifeline for many homeowners but with rent increases over the last decade its value has been slowly eroded over time. With nearly 60% of room rentals in the UK over the threshold this reform can only be beneficial for the housing market."
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