Rent a room relief and bed and breakfast income

Understanding Rent a Room Relief for B&B Income

Rent a Room Relief allows homeowners to earn up to £7,500 tax-free (previously £4,250 before 2016/17) by letting out furnished rooms in their home. Many assume this relief only applies to long-term lodgers, but it can also be claimed against bed and breakfast (B&B) income, even though this type of letting is considered a trading activity.

This means that if you rent out rooms on a short-term basis, such as during major events like Goodwood Week or the Festival of Speed, you could still pay no income tax on earnings up to the threshold.

How Rent a Room Relief Works for B&Bs

To qualify for Rent a Room Relief for B&B income, you must:

  • Let out furnished accommodation in your main home.
  • Not use the property solely for rental purposes (e.g., a dedicated B&B business would not qualify).
  • Ensure total rental income does not exceed £7,500 per year.

If your rental income exceeds the limit, you can choose between two tax treatments:

  1. Pay tax on the rental profit (income minus expenses).
  2. Use the Rent a Room Relief threshold and only pay tax on income exceeding £7,500.

For many occasional B&B hosts, option two is the simplest way to minimise tax liability.

How We Can Help

At Lewis Brownlee, we specialise in tax-efficient property income strategies, including Rent a Room Relief for B&B income. Whether you let out rooms during Goodwood Week or other events, we can ensure you remain compliant and tax-efficient.

We offer a free introductory meeting to discuss your rental income and tax options. Help is at hand!

For expert tax advice, contact us today.

Understanding Rent a Room Relief for B&B income can help occasional hosts maximise tax-free earnings while staying compliant with HMRC rules. Proper planning ensures financial efficiency.