Back in November 2009 we launched a campaign called Raise the Roof with the intention of asking the government to increase the tax free amount people can earn by renting out a room in their home.
We’ve been running flatshare websites for over 10 years now; our first, www.intoLondon.com, started in 1999 and SpareRoom followed in 2004. In that time we’ve spoken to a lot of live in landlords, and one of the issues that comes up most is how to rent out a room without straying into the realms of having to fill out a tax return.
The Rent a Room Scheme currently lets anyone renting out a room in their home earn up to £4,250 a year tax free. The problem is almost 60% of rooms let in the UK have a rental value higher than the threshold. This leaves the landlord with 2 options: either charge less than the room is worth or fill out a tax return for the remainder. Most PAYE taxpayers are worried about the implications of self-assesment, especially if the return is for a few hundred pounds a year.
As the threshold hasn’t been changed at all under the current government (the Conservatives last changed it in 1997, just before losing the election to Labour), and rental prices have soared in that time, it seems only fair to increase the limit to a reasonable level. After consulting with Shelter and comparing figures we decided to ask for a new limit of £9,000. With Shelter’s backing, along with that of the National Landlord’s Association and Sarah Beeny, we hoped to raise awareness and bring the issue to the attention of those in power.
We began by writing to MPs, Treasury officials and members of the House of Lords to outline our proposals and gauge support for the campaign. We received many positive responses as well as requests for more information, from both the Department for Communities and Local Government (who invited us in to go over the details) and from the housing minister’s office.
Public support for the campaign has been excellent as well. So far we’ve collected 6,800+ signatures on our petition. A poll asking whether people would be more likely to rent out a room if the prospect of filling out a tax return wasn’t an issue returned an overwhelming 89% majority saying yes.
The next step was to get an EDM (or Early Day Motion) tabled in the commons. This is basically a means of getting MPs to voice their support for an issue. Paul Keetch, Liberal Democrat MP for Hereford tabled EDM 860 ‘Raise the Roof Campaign’ on February 2nd and it has so far been signed by 60 MPs. It’s interesting to note the split of parties: Labour account for 50% of the signatures and Lib Dems a further 25%. The rest is divided between the Conservatives and others.
It will be interesting to see how the election affects the issue. One thing is for certain – if we want to encourage people to rent out rooms we have to make sure the incentive remains valuable and serves its purpose.
To find out more visit http://www.spareroom.co.uk/raisetheroof.