by Asim Abbas
11 November 2026 
Rent a Room Scheme: earn £7,500 tax-free from a lodger
Rent a Room Scheme: earn £7,500 tax-free from a lodger
Letting a furnished room in your own home to a lodger can bring in up to £7,500 a year tax-free under the Rent a Room Scheme.
- Earn up to £7,500 a year tax-free
- The limit is £3,750 each if income is shared
- The room must be furnished and in your main home
- Over the limit you can choose the best method for you
It’s one of the simplest tax reliefs available, but there are rules on what qualifies and when you still need to file a tax return.
This guide explains how the scheme works and how to choose the best option if your rent goes over the limit.
How Rent a Room works
If you let furnished accommodation in your only or main home, the first £7,500 of gross receipts a year is tax-free. If you share the income with someone else, such as a partner, the limit is £3,750 each. Receipts include rent plus anything the lodger pays for meals, cleaning, laundry or bills.
What qualifies
- A lodger living in a furnished room in your main home
- Bed and breakfast or guest house income from your home
- Homeowners and tenants (check your lease or tenancy allows it)
What doesn’t qualify
- Letting a whole property you don’t live in
- A self-contained flat separated from your home, such as a converted annexe let as a separate dwelling
- Unfurnished rooms
- Rooms used as an office or for business
Short-term lets such as Airbnb in your own home can qualify if you live there at the same time, but HMRC will look closely at the facts. See our Airbnb tax guide.
Rental income tax calculator
Compare tax on your rental income.
If you earn more than £7,500
You then have a choice each year:
| Method | How it works | Best when |
|---|---|---|
| Rent a Room relief | Pay tax on receipts above £7,500, with no expenses | Your costs are low |
| Normal method | Pay tax on receipts minus actual expenses | Your costs exceed £7,500 |
Tom lets a room for £750 a month, £9,000 a year, including bills. His share of extra bills and wear and tear comes to about £1,800. Under Rent a Room, he pays tax on £1,500 (£9,000 minus £7,500). Under the normal method, he would pay tax on £7,200. As a basic rate taxpayer, Rent a Room costs him £300 in tax instead of £1,440.
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Get a fixed-fee quoteCall 0161 531 4179Do you need a tax return?
- Under £7,500: relief is automatic and you don’t need to tell HMRC, unless you already file a return
- Over £7,500: register for Self Assessment by 5 October after the tax year and claim the relief on your return
- Choosing the normal method: you must opt out of the scheme on your return
Rent a Room income doesn’t count towards the Making Tax Digital qualifying income limit when it is covered by the relief. If you also have other property or self-employed income, check our guide to MTD from April 2027.
Other things to check
- Tell your mortgage lender and home insurer
- Living with a lodger doesn’t usually affect Private Residence Relief when you sell your home
- A lodger normally has fewer rights than a tenant, but a written agreement is still sensible
- Your single person Council Tax discount may be lost
HMRC’s Rent a Room guidance sets out the rules. For larger property portfolios, see our landlord tax return guide.
What should I do next?
Include bills and meals.
If you’re over £7,500.
By 5 October.
Frequently Asked Questions
How much can I earn tax-free from a lodger?
Up to £7,500 a year, or £3,750 each if the income is shared.
Do I need to tell HMRC about a lodger?
Not if your receipts are under £7,500 and you don’t otherwise file a tax return.
Can I claim expenses under Rent a Room?
No. If expenses are higher, you can opt out and use the normal method instead.
Does Rent a Room apply to Airbnb?
It can if you let a furnished room in your own home while you live there.
Can tenants use Rent a Room?
Yes, if your tenancy allows you to take in a lodger.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Stephen Reynold
I’m Stephen Reynold, an accountant at Wingate Accountants. I work with sole traders and small companies, turning tax rules into clear, practical next steps.
