State Pensioners Can Boost Tax-Free Income with Rent-a-Room Scheme

Nigel Holland BA (Hons) FCA, principal of Holland & Co Chartered Accountants, comments:
“Renting spare rooms offers pensioners simple tax-free income when planned correctly.”

Many retirees are unaware that state pensioners can increase their effective tax-free income by using the . The scheme allows homeowners to earn up to £7,500 annually from renting furnished accommodation in their home without paying tax. Consequently, some pensioners can achieve a combined tax-free income of about £20,070 when the personal allowance and rental exemption are combined.

However, careful planning is important. Pensioners must consider record-keeping, eligibility rules and the effect on benefits or allowances. In addition, rental income above the limit becomes taxable and must be declared to .

Holland & Co Chartered Accountants can help pensioners structure their rental arrangements efficiently. We can review your tax position for £200 plus VAT and identify legitimate ways to minimise tax. We also assist with record keeping and recommend efficient bookkeeping systems such as KashFlow. See https://www.hollandandcompany.co.uk/tax-returns/ or https://www.hollandandcompany.co.uk/.

• Pensioners can earn £7,500 tax-free renting a room.

• Combined tax-free income may reach about £20,070.

• Rules and benefit effects need careful review.

• Records must be accurate and complete.

• Tax reviews can identify further savings opportunities.

Property income, pensioners, tax planning, Rent a Room Scheme, personal allowance