The Rent a Room Scheme
The Rent a Room Scheme lets you earn up to £7,500 a year tax-free from letting furnished accommodation in your own home — £3,750 if the income is shared with someone else. It does not apply to a property let out as a whole. Above the threshold you choose each year between the scheme and declaring income and expenses normally.
One of the few genuinely simple reliefs in UK tax: a fixed amount, tax-free, with nothing to claim if you stay under it. The complications only start at the threshold — and at the point where the room stops being in your home.
The threshold is on income, not profit
£7,500 of receipts, before any costs. Charge £700 a month and you are at £8,400 — over the limit, regardless of what the heating cost.
And where the income is shared — a jointly owned house, a couple letting a spare room — the limit halves to£3,750 each rather than £7,500 between you. It is a per-person limit that shrinks when the income is split, which catches most couples the first time.
What qualifies
Furnished accommodation in your own home. It does not apply to a property let as a whole, or to a home converted into separate flats.
So it covers:
- A lodger in your spare room
- Several rooms in the house you live in
- Short stays in your own home, where the accommodation is furnished and part of your residence
And it does not cover:
- A flat or house you have moved out of
- A property you own separately and let
- Accommodation converted into a self-contained flat
- Unfurnished accommodation
Over the threshold: the annual choice
Once receipts exceed £7,500, you pick — and you can pick differently each year:
| Option | How it works | Better when |
|---|---|---|
| Stay in the scheme | Tax on receipts above £7,500, with no deduction for costs | Your costs are low |
| Opt out | Declare income and allowable expenses on the property pages, as an ordinary letting | Your costs are high, or you made a loss |
On £9,000 of receipts with £1,000 of costs, staying in the scheme taxes £1,500 while opting out taxes £8,000 — the scheme wins easily. Reverse the numbers, with £7,000 of costs, and opting out taxes £2,000 against the scheme's £1,500 — closer, and worth actually calculating rather than assuming.
Not sure which side of the line you are on?
Tell us the arrangement — what is let, whether you live there, and who receives the money. We will tell you whether the scheme applies, which option is cheaper, and whether a return is needed at all.
Ask on WhatsAppOr send an email
Free assessment first. If there is work to do, you get a fixed quote in writing before anything starts.
When it stops applying
The most common way people fall out of the scheme is by moving. Let the room while you live there and it applies; move in with a partner and let the whole place and it does not — you are now an ordinary landlord, withrental income rules, the mortgage interest restriction, and a return to file by 31 January.
Move abroad and keep it let, and the non-resident landlord schemeapplies on top. Each of those transitions is easy to miss, because nothing about the tenant or the rent changed — only where you were living.
Questions people ask
How much can I earn tax-free?
£7,500 a year from letting furnished accommodation in your own home — halved to £3,750 where the income is shared with someone else, typically a spouse or joint owner.
Does it apply to a flat I rent out entirely?
No. Furnished accommodation in your own home. It does not apply to a property let as a whole, or to a home converted into separate flats. If you have moved out and let the whole place, you are an ordinary landlord and the normal rules apply.
Do I need to do anything if I am under the threshold?
Usually nothing — the exemption is automatic if the income is below the limit and you are not already filing a return for another reason. If you do file, you tell HMRC on the return that the scheme applies.
What if I earn more than the threshold?
Two options, and you choose annually: pay tax on everything above £7,500 with no deduction for costs, or opt out of the scheme and declare the income and expenses normally. Which is better depends entirely on how much your costs are.
Does taking in a lodger affect anything else?
It can. Check your mortgage terms and your insurance, and if you own a leasehold flat, the lease. Council tax single-person discount is also lost. None of these are tax questions, and all of them cost more to discover afterwards.
What about Airbnb and short lets?
The scheme can apply to short lets in your own home if the accommodation is furnished and part of your residence. It does not apply to a separate property let out on a platform, which is ordinary rental income — see our rental income calculator.
Figures are for the tax year shown and change every April. They are general information, not advice — we check the current position for your circumstances before anything is filed.
Reviewed 19 October 2026.
Part of our work on landlords and property — if you want someone to take it off your hands, start with our landlord accountant page.