Landlords who take lodgers into their home will see the amount they can earn in rental income before paying tax increase hugely from April, from £4,250 a year to £7,500.

The boost is so significant that it will mean many of those renting a room in their home will no longer have to pay any tax on their rental income.

Tax break on property income

The Chancellor announced another measure in his Budget yesterday that could impact anyone making an income from their property (not just those with lodgers).

A new tax-free allowance of £1,000 will be introduced for those making either trading income or income from property, targeted at ‘ebayers and ‘airbnb’ landlords and those using similar sites.

The idea is that people can make modest amounts of money from sharing their properties or selling goods online, without worrying about tax implications. Anything over £1,000 needs to be declared in your tax return.

The Treasury confirmed that the £1,000 would apply to anyone renting property (including for example somebody travelling for two months and renting out their house while they are away), but the larger £7,500 Rent a Room Scheme allowance only applies to those living at home and taking in a lodger in a spare room.