Renters and homeowners taking in lodgers should be able to earn more tax free rent a room cash, according to the Institute of Directors.
The business lobby group is asking Chancellor George Osborne to indicate he will raise the limit in his next Budget when he makes his autumn statement next week.
The IoD wants to see rent a room relief for householders sharing their homes with lodgers increased.
The current maximum tax-free threshold is £81 a week or £4,250, which the IoD argues is not enough to cover the cost of booking a hotel room in London or many large cities.
The rate has not been increased since rent a room relief was introduced in 1997.
They want to see the relief hiked to £6,960 a year, the equivalent of £133 per week.
The increase, claims the IoD, would encourage more householders to open their doors to sharers and make more places available to stay for workers with long commutes.
Together with lifting the limit on rent a room, the IoD also wants to see more tax-free incentives offered to sharers who regularly give lifts or offer their driveways as parking spaces.
“The government has made clear its desire to establish the UK as a global leader in the sharing economy, and we welcome this commitment,” said Jimmy McLoughlin, deputy head of policy at the IoD.
“At its simplest, the sharing economy is about letting people make the most of their assets and the government should establish a tax regime that encourages and supports this.
“The original rent a room allowance was brought in as recognition that thousands of people had the means and opportunity to supplement their income in this way, and our proposals represent a modernisation of that same understanding.”
Rent a room relief is available to homeowners and renters who let a furnished room in their main home to a lodger.
Tax rules do not allow renting business or storage space.
Rents up to £4,250 a year are tax-free and do not have to be reported to HM Revenue & Customs (HMRC) on a tax return.