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AAT Calls On UK To Drop Rent-A-Room Tax Reform Plans

by Jason Gorringe, Tax-News.com, London

17 January 2018


The Association of Accounting Technicians (AAT) in the UK has called on the Government to leave untouched a tax concession for those who rent out a room in their house.

The so-called "rent-a-room relief" provides income tax relief for those letting out furnished accommodation, to incentivize individuals to make spare capacity in their homes available for rent. It is currently set at GBP7,500 per year.

The Government announced during the 2017 Autumn Budget that it wanted to establish how rent-a-room relief is used and to better target it towards longer-term lettings.

In its response to the Government consultation, the AAT said the Government should not introduce additional complexity to the tax system by making alternations. It said the Government should consider the wider benefits to both landlords and lodgers and to consider also the tax arrangements of those using digital platforms, such as Airbnb, to temporarily provide accommodation.

Phil Hall, AAT's Head of Public Affairs and Public Policy, said: "The simplicity of rent-a-room relief has made it attractive, so imposing restrictions based on the success of short-term and holiday lettings obviously risks damaging the sector."

"Restrictions will reduce accommodation availability and choice as well as reducing the incomes of many people who find this one of the few ways they can supplement their earnings in a relatively simple and tax-efficient manner."

"It's not clear why the Government is so concerned about people renting their spare rooms out for holiday and short-term lets but if the costs of this relief are the main driver then this appears to be misguided," said Hall.

"Instead of looking at individuals who just want to supplement their income by renting out a spare room for a few nights a year, government would be better advised to direct its attention to the questionable tax arrangements of some digital platforms such as Airbnb."

TAGS: individuals | tax | real-estate | United Kingdom | tax breaks | individual income tax

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