PEOPLE who fancy making extra cash by taking in a lodger will soon be able to charge £80 a week in rent without paying tax.

The tax exemption, known as "rent-a-room relief", is about to be increased by £1,000 to £4,250 from April 5.

And because the limit is annual, not weekly, landlords can even charge more than £80 a week provided the limit is not exceeded in the year.

For instance, renting two rooms out to students at £60 a week each for 35 weeks during term time means a total income of £4,200 - still below the limit.

"The other great advantage is that there are no tax formalities to worry about," said Ian Cherry, president of the North West Society of Chartered Accountants.

"If you do not receive a tax return, there is no need to inform the inspector and if you do receive one, you simply have to tick a box to say that your receipts for the year are less than the limit."

However, letting rooms in a second home is not covered, nor is running a bed and breakfast business where guests only stay a few nights at a time.

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