Solve your Financial Woes with the ‘Rent a Room’ scheme

As we kick on in to 2008 with the excesses of the Christmas and New Year break long forgotten, you no doubt made yourself a few promises as to how things were going to be different this year.

One thing that may have been on your agenda may be to improve your finances. After all, who wouldn’t want to have a better financial situation.

You might be trying to get more overtime at work, or maybe working a second job, and no doubt you considered momentarily reducing your spending on non essential items before you realised that you had too little will power for that to ever become a reality. The trouble is that none of these options sound like much fun in reality so you’ve probably already resigned yourself to more of the same.

If you’re a homeowner, have you ever considered that you might be sitting on a nice little earner? You may not know that the government has a scheme called the ’Rent a Room’scheme that allows you to rent out a furnished room in your home, for a tax-free amount of up to £4,250 per year. That’s about £6,000 extra per year that you’d have to make as a tax payer at 22% and well over £7,000 extra if you pay tax at the higher rate of 40%. If you can make even £20 per hour on overtime, that’s 300 hours you’d have to work to make £6,000, or 37.5 days if you break it down into 8 hour days.

I imagine that all of a sudden, the prospect of sharing your house seems more appealing. You could also bear in mind that on top of the income that you can receive for renting a room, you can also split bills with your new housemate which will also help to reduce your outgoings.

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