Avoid home repossession – the tax-free way

The number of home-owners renting out a spare room tripled last year according to Abbey Mortgages research.

There were 981,000 lodgers in the UK in 2009 compared to 388,000 lodgers the previous year. 16 million UK home-owners have at least one spare room and if all of these rooms were to be let, home-owners would collectively reap as much as £6.29 billion in lodger dividends.

Income from lodgers can be free of liability for tax. Her Majesty’s Revenue and Customs allows £4,250 per year tax-free income under their “rent a room” scheme. This is a great incentive for mortgage borrowers who are struggling, even if it is perhaps a bit of a last resort if seeking to avoid repossession.

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