HMRC's rent-a-room scheme increases Personal Allowance to £20,070

HMRC in the UK is offering an enhanced Personal Allowance of up to £20,070 for those utilizing the rent-a-room scheme on their tax return. This is in response to frozen income tax thresholds until at least 2028, potentially pushing more individuals into higher tax brackets due to inflation. The rent-a-room scheme allows taxpayers to earn up to £7,500 tax-free from renting out a furnished room in their main residence, raising the threshold to £20,070. Taxpayers can opt out of the scheme if needed, offering flexibility in tax planning, as reported by The Accountant.

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