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The tax free £4250 that lies hidden in your home

Most people are familiar with the concept of letting out a spare room in their home, but few realise that the first £4,250 you get each year is free of tax under the government's 'Rent a Room' scheme

To qualify, the room must be in your principal residence if you have two of them, and any income you get from meals, laundry etc. counts as income towards the £4,250.

The scheme allows for letting a whole floor, but not if your house is already divided into separate flats, and it applies whether you own your own place or are renting it - although in the latter case you will have to check your contract to see if you are allowed to sublet a room.

There are a number of websites where you can find a lodger, including www.uk.easyroommate.com, or you can advertise locally.

But always be sure to take two references and to ask for proof of identity.

Full details of the 'Rent a Room' scheme can be found online from www.hmrc.gov.uk

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