Landlord Tax / Lesson 3 of 9
Rent a Room relief
Letting a spare room can be entirely tax free. Most people who could use this do not.
The short answer
- ✓ Rent a Room exempts up to £7,500 a year from letting a furnished room in your own home
- ✓ Below the threshold there is generally nothing to report
- ✓ Above it, choose between deducting the threshold or deducting actual expenses
- ✓ Two people sharing the income get half the threshold each, not double
What it does
The Rent a Room Scheme lets you receive up to £7,500 a year, tax free, from letting furnished accommodation in the home you live in. It is one of the most generous reliefs available to ordinary taxpayers, and one of the least used.
Who qualifies
- The accommodation must be furnished
- It must be in your own home, the one you actually live in
- You can be an owner or a tenant, subject to your own lease terms
- It does not apply to a property let as a whole, or to one you have moved out of
- It does not apply to space used as an office or for business by the occupant
How the threshold works
Room income for the year £6,200
Rent a Room threshold £7,500
Below the threshold, the income is exempt and you
generally do not need to report it at all.Room income for the year £10,000
Actual expenses £1,200
Method A income less expenses 10,000 - 1,200 = £8,800 taxable
Method B income less threshold 10,000 - £7,500 = taxable <-- usually betterOver the threshold you choose whichever leaves less taxable. With modest expenses, deducting the threshold almost always wins.
Sharing the threshold
If two people receive the income, for example a couple, the threshold is halved for each. It is not doubled. A couple letting a room between them get half the amount each, which totals the same figure, not twice it.
The bit HMRC does not spell out
Rent a Room is an all-or-nothing choice for the year, and choosing it means you cannot claim a loss. If letting the room genuinely costs you more than it brings in, perhaps in a year with significant repairs, working out the actual profit or loss in the normal way may be worth more, because a loss can be carried forward.
Also worth knowing: the relief is per residence, not per room. Letting three rooms in the house you live in shares one threshold between them, and does not give you three.
Common mistakes
- Applying it to a whole property. The accommodation must be in the home you live in.
- Assuming a couple gets double. The threshold is halved for each of you.
- Thinking it is per room. One threshold per residence.
- Using it automatically in a loss year. The normal method may be worth more.
Try it on your own numbers
This is the same calculator as the full tool page, using 2026/27 rates.
Letting a room in your home
The Rent-a-Room scheme makes the first £7,500 of rent tax-free. We compare it to claiming real expenses.
A share of bills, repairs, etc. Only used by the normal method.
If you share the income with someone else, the allowance is halved (£3,750 each).
Best method
No tax to pay, and if you use Rent-a-Room you may not even need to report it.
Tax of , saving vs the other method.
Rent-a-Room
taxed on
Normal method
taxed on
Estimate only. Rent-a-Room only applies to a furnished room in your own home (not a separate flat or whole-property let).
Key takeaways
- ✓ Rent a Room exempts up to £7,500 a year from letting a furnished room in your own home
- ✓ Below the threshold there is generally nothing to report
- ✓ Above it, choose between deducting the threshold or deducting actual expenses
- ✓ Two people sharing the income get half the threshold each, not double
Check you have got it
3 quick questions. No score is kept, and you can change your mind.
1. You receive £6,200 from a lodger in your own home. What do you owe?
2. You and your partner jointly let a room. How much Rent a Room relief do you get between you?
3. Can Rent a Room relief be used for a flat you own but do not live in?
Sources
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