§ Mr. ThurnhamTo ask the Chancellor of the Exchequer what would be the cost to the Exchequer of extending the rent-a-room tax allowance to all tenanted property. [28883]
§ Sir George YoungThe rent-a-room scheme was introduced in the Finance (No. 2) Act 1992. It applies to individual owner occupiers and tenants who let furnished accommodation in their only or main home.
Under this scheme gross annual rents from this sort of letting which do not exceed £3,250 per annum for one qualifying individual, or £1,625 per annum; for more than one, are exempt from tax altogether. Individuals who receive income which exceeds £3,250, or £1,625, in a year are able to choose between paying tax on it in the ordinary way—that is on the balance of gross receipts after actual expenses—or paying tax only on the amount by which their gross receipts exceed £3,250, or £1,625, without any relief for actual expenses.
The annual cost of extending the rent-a-room allowance to all individual landlords of tenanted property would be £250 million, without allowing for any behavioural effects which would increase the cost.