‘Earn up to £7500 a year’ – Money-making tip could help ease the cost of living in 2023 | Personal Finance | Finance

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Renting out a spare room is one of the easiest ways to make money in 2023 and Britons can earn £7,500 tax free. However, many first-time landlords don’t know where to begin when deciding to take in a lodger. Experts at money.co.uk have provided the top things people need to consider before taking in a lodger. 

While it’s an easy way to make an extra income, homeowners with a mortgage may need permission from their lender before renting out a room.

Tenants who are renting from a private landlord should check the tenancy agreement to see what the landlord will permit.

To find a lodger, people can check out SpareRoom.co.uk, RoomBuddies.co.uk and MondaytoFriday.com. 

It’s a good idea to ask a potential lodger for references and set up a meeting with them before signing an agreement. 

Write up an agreement – a written agreement will allow both you and your lodger to clearly understand the rights and responsibilities both parties should uphold. For example, the exact amount of rent to be paid, whom it should be paid to, the contract length and any break clauses. 

As well as a general written agreement, it would also be a good idea to make an inventory of the lodger’s room. Kellie Steed, Mortgage Expert at money.co.uk, said: “One way you can benefit from taking in a lodger is through the government’s Rent a Room scheme.

“This allows live-in landlords to earn up to £7500 a year of tax-free cash, anything after that will be taxed. If you make less than the £7500 threshold, then you don’t need to do anything and your tax exemption is automatic. 

“However, if you earn above this threshold, you can opt into the scheme by letting HM Revenue & Customs know on your tax return, this way you can still claim your tax-free allowance. You can opt into the scheme at any time if you are a resident landlord and if you run a B&B or guesthouse.”

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She continued: “If you plan to rent out a room privately, the amount you can make really depends on the location of your property, its condition and the size of the room.

“To get a general idea, it is estimated that the current average for a double room in the UK is £90 a week. As well as charging for rent, you could also charge your lodger for council tax, utility bills, and even cleaning and food if provided. This would be a big help for those struggling with the rising costs of living on their own.

“If you are planning on buying a house in the near future, another great benefit of having a lodger is that this added stream of income can improve your affordability when applying for a mortgage. In turn, this might provide you with better deals and larger loans.

“However, you should be aware that not all lenders will take this into account given the short-term nature of having a lodger; it may only be the most flexible lenders that will look at the whole picture.”

However, it’s important for people to check whether taking in a lodger will affect benefits entitlement.

Ms Steed explained: “It’s also important to note that taking in a lodger can affect any benefits you receive.

“If you receive means-tested benefits such as a Housing Benefit, the first £20 of weekly income from your lodger will be disregarded, as well as 50 percent of anything over £20 if you provide your lodger with food.

“You will also remain responsible for paying council tax when taking in a lodger and will no longer benefit from the 25 percent single person discount if you previously lived alone.”

Express.co.uk has researched 23 money-making tips for 2023 with one claiming people can earn up to £10,000 for 10 minutes work.

Britons might be able to get more money listing a room on Airbnb or through a local language school.

People could also advertise their skills on sites like Skillshare and TaskRabbit and earn up to £28 an hour in their spare time.

One of the best apps for making money is YouSpotProperty as it gives you the chance to earn up to £10,000 if a property sells.

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