Budget 2018: shared occupancy test for rent-a-room relief rejected

The government has dropped plans to introduce a shared occupancy test to qualify for rent-a-room tax relief, confirmed in Budget 2018

Following consultation on draft legislation and feedback highlighting the unnecessary complexity of changing the rules, legislation on a ‘shared occupancy test’ has been removed from Finance Bill 2018-19.

The government will retain the existing qualifying test of letting in a main or only residence, and will work with stakeholders to ensure that the rules around the relief are clearly understood to stop abuse of the system.

The proposals, announced in the summer by the Treasury, set out a new shared occupancy test for those renting their spare rooms to continue to qualify for the annual £7,500 rent-a-room tax relief.  

This would have brought an end to rent-a-room relief for those who rented out a single room while they were absent or from renting out entire properties while away from home. This would have hit sporting events, where for example people rent out their properties during the Wimbledon fortnight or British Open.

The Association of Accounting Technicians (AAT) campaigned against the change which they said added unnecessary complexity to the tax system, had a negligible impact on tax receipts, would draw thousands of people into the tax self-assessment system and would be a ‘nightmare’ to enforce.

Phil Hall, AAT head of public affairs & public policy, said: ‘AAT is delighted that HM Treasury has seen sense on this and recognised that the best solution for landlords, tenants, policymakers and the economy was to drop these plans and allow rent-a-room relief to continue as it has for over 25 years as a simple to administer, easy to understand tax relief that is available to all.’

Report by Sara White

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