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The rising cost of living makes having a lodger or renting out a room in your home an appealing way to earn extra cash. The government offers a Rent a Room scheme that allows you to earn rental income tax-free up to a certain limit. This video, presented by Kozan from Financial Madness, clarifies that the focus is on renting a room in a property you live in, rather than investing in a property solely for rental purposes. The discussion emphasizes the difference between having lodgers, who share your living space, and tenants, who rent an entire property.