The Rent a Room scheme: how much can you earn from a lodger tax-free?

For income tax, Rent a Room relief is UK-wide; council tax is different because England, Scotland and Wales have council tax discounts, while Northern Ireland has domestic rates instead. The key tax figure is £7,500 a year, or £3,750 each where the income is shared.

What is the Rent a Room scheme?

The Rent a Room scheme is UK tax relief for income from letting furnished accommodation in your only or main home, usually to a lodger. The statute says: “This Chapter provides relief on income from the use of furnished accommodation in an individual's only or main residence.” It also names the relief directly: “The relief is referred to in this Chapter as ‘rent-a-room relief’.” In practical terms, the UK Rent a Room scheme deals with the tax implications of having a lodger, not the housing-law permission to take one in. It is not a registration scheme and it is not something you apply for before the lodger moves in; SpareRoom puts the market position plainly: “The Rent a Room scheme isn't a registration programme, and you don't ‘apply’ in advance.” The tax question is whether your receipts qualify for the relief and whether they exceed the annual limit.

Who can use the Rent a Room scheme?

Owner-occupiers and tenants can use the Rent a Room scheme if they let furnished accommodation in their only or main home, but the relief is for individuals and not companies or partnerships. HMRC’s helpsheet says: “The Rent-a-Room Scheme allows owner occupiers and tenants to receive tax-free rental income if you provide furnished accommodation in your only or main home.” HMRC’s manual adds the company and partnership exclusion: “It does not apply to companies or partnerships.” The statutory test also requires UK furnished accommodation, covering receipts “in respect of the use of furnished accommodation in a residence in the United Kingdom or in respect of goods or services supplied in connection with that use”. If you are a tenant, your tenancy may still require your landlord’s consent, but that is a tenancy issue rather than a Rent a Room tax condition. For tax implications of renting your primary residence, the core question is whether it is your only or main home during the relevant period.

How much rent can you take from a lodger before you pay tax or have to declare it?

GOV.UK says the exemption needs earnings “less than” £7,500, but the Act exempts amounts that do not exceed the limit, so £7,500 itself is tax-free. HMRC states that “The ‘basic amount’ in ITTOIA05/S789(4) is £7,500,” and the statutory full-relief test applies where “the individual's total rent-a-room amount for the tax year does not exceed the individual's limit for the tax year”. The threshold is £3,750 if you share the income with someone else: “The threshold is halved to £3,750 if you share the income with someone else.” You must complete a tax return if you earn more than your threshold; GOV.UK says: “You must complete a tax return if you earn more than your threshold.” Going over £7,500 does not expel you from the scheme, because HMRC says: “If they’re more than the limit, you may still be able to benefit under the Rent-a-Room Scheme.” No tax rule fixes how much rent you may charge a lodger; the fixed figure is the tax-free limit, not a rent cap.

Does the £7,500 include the bills your lodger pays you?

Yes, the £7,500 Rent a Room limit includes bills and other payments your lodger pays you in connection with the room, not just the amount labelled rent. HMRC’s example counts utility contributions inside gross receipts: “His gross receipts for 6 April 2025 to 5 April 2026 are £10,600 (£10,400 rent plus £200 for the heating and light).” The legislation does not list every possible bill, but it brings in connected goods and services, and gives examples: “Meals, cleaning and laundry are examples of goods or services supplied in connection with the use of furnished accommodation in a residence.” HMRC also says a separate agreement does not change the result: “The fact that such sums may be paid under a separate agreement is irrelevant if the goods or services supplied are connected with the use of the furnished accommodation.” A lodger paying their own supplier directly is different from paying you, because the Rent a Room test is based on your receipts.

If your lodger's rent goes over £7,500, are you taxed on all of it or just the excess?

If your lodger’s rent goes over £7,500, the default is tax on actual profit from the whole letting, but if you elect for the Rent a Room method you are taxed only on gross receipts above £7,500, or above £3,750 if the income is shared. HMRC says the default is Method A: “HMRC will automatically use your actual profit (Method A) to work out your tax.” Under that route, the calculation is normal profit: receipts less allowable expenses. If you choose Method B, HMRC says: “You pay tax on your gross receipts over the Rent-a-Room limit — that is, your gross receipts minus £7,500 (or £3,750).” So a lodger tax calculator must ask which method you are using. If you charge £650 a month all-inclusive, that is £7,800 a year; under Method B the taxable amount is £300 before personal allowances and tax rates, not the whole £7,800.

Can you claim expenses as well as the Rent a Room allowance?

No, you cannot claim expenses as well as the Rent a Room allowance; you choose between the allowance method and the normal profit-and-expenses method. HMRC states the rule for the allowance method clearly: “You cannot deduct any expenses or capital allowances if you choose this method.” The legislation says the same for the alternative calculation: “any expenses associated with those receipts are not brought into account.” The other route is Method A, where HMRC says: “You pay tax on your actual profit — your total receipts less any expenses and capital allowances.” That means expenses for a lodger are not added on top of the £7,500 relief. If your receipts are below the limit and the exemption applies, HMRC’s manual also says: “But they can’t then claim any of the expenses of the letting, see PIM4020.” The practical choice is therefore simple: use Rent a Room relief if the fixed allowance beats your expenses, and use normal accounting if expenses produce the lower taxable profit.

Is the £7,500 one allowance per property, or one per lodger?

The £7,500 Rent a Room figure is one annual limit for the individual’s qualifying receipts, not one allowance per lodger, so two lodgers do not create two £7,500 allowances. The statute frames the test around “the individual's limit for the tax year,” and the basic amount was amended so that in section 789(4) “for ‘£4250’ substitute ‘£7500’.” The limit is halved when the income is shared with another qualifying person, not when you let more rooms; HMRC’s example says: “If Josephine and Judy had also been qualifying individuals their limit would have been £3,750 each.” Moving home during the year does not restart the allowance either, because HMRC says: “If you rent out a room in both your old and new home, you need to add together the total rent from the old and new home that you received for the year.” You can let more than one room, but the tax-free ceiling remains one annual Rent a Room limit.

How do you claim Rent a Room relief on your tax return?

GOV.UK says the exemption needs earnings “less than” £7,500, but the Act exempts amounts that do not exceed the limit, so £7,500 itself is tax-free; below the limit the relief is automatic unless you elect out, and above it you claim the allowance on your tax return. If you also let other properties in the same tax year, that Rent a Room entry sits on the same SA105 property pages as the rest of your rental income. Abodient's SA105 export draws from the same records used for its MTD quarterly updates, so a landlord who also takes in a lodger isn't reconciling two separate tax trails. The statute says income below the limit “is not charged to income tax unless the individual elects otherwise”. If you already complete Self Assessment, HMRC has said: “However, individuals who are already completing a self-assessment tax return must notify HMRC if they are using the relief.” On the SA105 property pages, the notes say: “If you let furnished rooms in your home and your total income was less than the Rent a Room exemption, £7,500 (£3,750 if let jointly) put ‘X’ in box 4.” If you are over the limit and opt in, the SA105 notes say: “If you’ve put any Rent a Room income in box 20, put the exempt amount you’re claiming (either £7,500 or £3,750, if let jointly) in box 37.”

Can you use the Rent a Room scheme for Airbnb and short stays?

Yes, Rent a Room relief can cover Airbnb and short stays if the accommodation is furnished accommodation in your only or main residence; the proposed shared-occupancy test was dropped and never became law. The Treasury described the existing position this way: “The current eligibility criteria for Rent a Room relief do not specify any particular length of let, so Rent a Room relief could be given on income from 365 one-day lettings to different people or from one 365 day letting to the same person.” The statutory residence condition is that “for some or all of that period the residence is the individual's only or main residence”. Some advisers and Airbnb material still describe Rent a Room as sharing space in a primary residence, and Airbnb says: “The Rent-a-Room Scheme allows you to earn up to £7,500 tax free from sharing space in your primary residence.” But the 2018 shared occupancy test was not enacted; the Budget document says “the government will not include legislation for the ‘shared occupancy test’ in Finance Bill 2018-19.” Do not use Rent a Room for a UK home let while you live abroad.

Do you lose your single-person council tax discount if you take in a lodger?

In England, Scotland and Wales, you usually lose the single-person council tax discount if an adult lodger has their sole or main residence in your home and is not disregarded; Northern Ireland has no council tax and no single-person council tax discount to lose. In England the discount applies where “there is only one resident of the dwelling and he does not fall to be disregarded for the purposes of discount,” and the percentage is 25%. A resident is an adult whose sole or main residence is the dwelling: “‘resident’, in relation to any dwelling, means an individual who has attained the age of 18 years and has his sole or main residence in the dwelling.” Wales now sets its own discount rules from 1 April 2026, but the current Welsh regulation still gives “a discount equal to 25%”. Northern Ireland’s position is different: “I have no plans to introduce a single occupancy discount here.” In England, GOV.UK says: “You must tell your council if having a tenant means you’re no longer entitled to a single person discount.”

Last reviewed September 2026.

Sources

• Income Tax (Trading and Other Income) Act 2005 s.784 — “This Chapter provides relief on income from the use of furnished accommodation in an individual's only or main residence.” Source
• Income Tax (Trading and Other Income) Act 2005 s.784 — “The relief is referred to in this Chapter as ‘rent-a-room relief’.” Source
• SpareRoom, Rent a Room scheme — “The Rent a Room scheme isn't a registration programme, and you don't ‘apply’ in advance.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “The Rent-a-Room Scheme allows owner occupiers and tenants to receive tax-free rental income if you provide furnished accommodation in your only or main home.” Source
• HMRC Property Income Manual PIM4001 — “It does not apply to companies or partnerships.” Source
• Income Tax (Trading and Other Income) Act 2005 s.786 — “(a)the receipts are in respect of the use of furnished accommodation in a residence in the United Kingdom or in respect of goods or services supplied in connection with that use,” Source
• HMRC Property Income Manual PIM4010 — “The 'basic amount' in ITTOIA05/S789(4) is £7,500.” Source
• Income Tax (Trading and Other Income) Act 2005 s.791 — “(b)the individual's total rent-a-room amount for the tax year does not exceed the individual's limit for the tax year, and” Source
• GOV.UK, The Rent a Room scheme — “The threshold is halved to £3,750 if you share the income with someone else.” Source
• GOV.UK, The Rent a Room scheme — “You must complete a tax return if you earn more than your threshold.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “If they’re more than the limit, you may still be able to benefit under the Rent-a-Room Scheme.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “His gross receipts for 6 April 2025 to 5 April 2026 are £10,600 (£10,400 rent plus £200 for the heating and light).” Source
• Income Tax (Trading and Other Income) Act 2005 s.786 — “Meals, cleaning and laundry are examples of goods or services supplied in connection with the use of furnished accommodation in a residence.” Source
• HMRC Property Income Manual PIM4020 — “The fact that such sums may be paid under a separate agreement is irrelevant if the goods or services supplied are connected with the use of the furnished accommodation.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “HMRC will automatically use your actual profit (Method A) to work out your tax.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “You pay tax on your gross receipts over the Rent-a-Room limit — that is, your gross receipts minus £7,500 (or £3,750).” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “You cannot deduct any expenses or capital allowances if you choose this method.” Source
• Income Tax (Trading and Other Income) Act 2005 s.797 — “(b)any expenses associated with those receipts are not brought into account.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “You pay tax on your actual profit — your total receipts less any expenses and capital allowances.” Source
• HMRC Property Income Manual PIM4001 — “But they can’t then claim any of the expenses of the letting, see PIM4020.” Source
• Income Tax (Trading and Other Income) Act 2005 s.789 — “If the individual does, the individual's limit for the tax year is the basic amount for the tax year.” Source
• Rent-a-Room Relief (Increase of Limit) Order 2015 — “In section 789(4) of the Income Tax (Trading and Other Income) Act 2005 for ‘£4250’ substitute ‘£7500’.” Source
• HMRC Property Income Manual PIM4010 — “If Josephine and Judy had also been qualifying individuals their limit would have been £3,750 each.” Source
• HMRC HS223, Rent-a-Room Scheme 2026 — “If you rent out a room in both your old and new home, you need to add together the total rent from the old and new home that you received for the year.” Source
• Income Tax (Trading and Other Income) Act 2005 s.784 — “If it does not, the income is not charged to income tax unless the individual elects otherwise (see sections 791 to 794).” Source
• HMRC, Call for evidence: Rent a Room relief — “However, individuals who are already completing a self-assessment tax return must notify HMRC if they are using the relief.” Source
• SA105 Notes 2025 — “If you let furnished rooms in your home and your total income was less than the Rent a Room exemption, £7,500 (£3,750 if let jointly) put ‘X’ in box 4.” Source
• SA105 Notes 2025 — “If you’ve put any Rent a Room income in box 20, put the exempt amount you’re claiming (either £7,500 or £3,750, if let jointly) in box 37.” Source
• HM Treasury, Budget 2018 overview of tax legislation and rates — “The current eligibility criteria for Rent a Room relief do not specify any particular length of let, so Rent a Room relief could be given on income from 365 one-day lettings to different people or from one 365 day letting to the same person.” Source
• Income Tax (Trading and Other Income) Act 2005 s.786 — “(c)for some or all of that period the residence is the individual's only or main residence, and” Source
• Airbnb, Responsible hosting in the United Kingdom — “The Rent-a-Room Scheme allows you to earn up to £7,500 tax free from sharing space in your primary residence.” Source
• HM Treasury, Budget 2018 overview of tax legislation and rates — “Following consultation on draft legislation, to maintain the simplicity of the system, the government will not include legislation for the ‘shared occupancy test’ in Finance Bill 2018-19.” Source
• Local Government Finance Act 1992 s.11 — “(a)there is only one resident of the dwelling and he does not fall to be disregarded for the purposes of discount; or” Source
• Local Government Finance Act 1992 s.11 — “In this section ‘the appropriate percentage’ means 25 per cent. or, if the Secretary of State by order so provides in relation to the financial year in which the day falls, such other percentage as is specified in the order.” Source
• Local Government Finance Act 1992 s.6 — “‘resident’, in relation to any dwelling, means an individual who has attained the age of 18 years and has his sole or main residence in the dwelling.” Source
• Council Tax (Discount Disregards) (Wales) Regulations 2026 reg.3 — “The amount of council tax payable in respect of any chargeable dwelling and any day is subject to a discount equal to 25% of that amount if on that day—” Source
• Northern Ireland Assembly written question — “I have no plans to introduce a single occupancy discount here.” Source
• GOV.UK, Rent, bills and tax — “You must tell your council if having a tenant means you’re no longer entitled to a single person discount.” Source