One way to earn some extra cash in the worsening economic situation is to rent out a room in your home.

The Government’s Rent a Room scheme allows you to receive £4,250 a year (about £350 a month) tax-free from renting furnished accommodation in your only or main home to a lodger. (Your only or family home is the one where you/your family live for most of the time. A lodger is someone who pays to live in your home, sometimes with meals provided, and who often shares the family rooms.)

A lodger can occupy a single room or an entire floor of your home. However, the scheme does not apply if your home is converted into separate flats that you rent out. Nor does the scheme apply if you let unfurnished accommodation in your home.

With a Rent a Room Agreement you have much more control over the tenancy than you do with full tenants who sign a Tenancy Agreement. Unlike tenants, lodgers do not have security of tenure and have no right to stay on if you give them notice to leave. It’s also much simpler to remove unsuitable lodgers than it is tenants.

Although not essential, it is a good idea to get the lodger to sign a Rent a Room Agreement.