The rent a room scheme allows live in landlords to earn up to £4250 in room rental, income tax free every year as long as they let furnished accommodation to lodgers within their own home, giving you the opportunity to earn £354 a month tax free.
In this situation you would not join the rent a room scheme and it would be considered as a business and you would pay tax as normal by contacting your local tax office and completing a tax return.
Yes you can take advantage of the rent a room scheme regardless of whether you're a home owner or renting the property, however if you are renting the property, you should check whether your lease allows you to take in a lodger or contact your landlord.
If you were to charge for additional service like providing Meals, Sky TV, Laundry Services etc, you will need to add the payments you receive to the rent, to work out the total income. If you get more than £4,250 a year in total, you will have to pay tax.
The rent a room scheme will benefit most people with the only main disadvantage to the scheme being you can't claim any expenses relating to the letting for example, wear and tear, insurance, repairs, heating and lighting.
If you don't want to join the scheme you pay tax on your rental earnings as normal by contacting your local tax office and completing a tax return form, but by doing this you won't benefit from the £4250 tax free benefit but it does mean you will be able to claim for expenses like:
No, not really, because CDs are better quality.
Seriously, always keep a record of any rental income and expenses for at least 6 years, keeping everything together in a folder.
If you require more information on the rent a room scheme go to Direct Gov.