Earning extra income: the rent a room scheme

I was speaking to a friend the other day who mentioned that he was thinking of letting a room in his home to a lodger. I mentioned that I vaguely remembered that there was a scheme allowing this to be done tax-free. I have checked on this since, and in fact the 'rent a room' scheme allows you to rent a room tax free for up to £4250 per year. This is possible whether the home is one you rent or own, although if you rent then it is likely that you will need permission from your landlord before sub-letting.

There are more details on this scheme at the direct.gov website, at the link below.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804