Rent a Room relief: £7,500 tax-free from a lodger
If you let a furnished room in the home you live in, the first £7,500 a year is tax-free under the Rent a Room Scheme. If someone else also gets income from letting in the same home, such as a joint owner, the limit is £3,750 each. Below the limit it's automatic. Above it, you choose the cheaper of two ways to pay tax.
Who can use it
You can use the scheme if you let furnished accommodation in your only or main home. You can own the home or rent it. It also covers running a bed and breakfast or guest house in your home. You can let as much of your home as you like.
You can't use it if the accommodation:
- isn't part of your main home when you let it
- is unfurnished
- is used as an office or for a business (a lodger who works from their room in the evenings or at weekends is fine, and so is a student who studies there)
- is in your UK home and let while you live abroad
It doesn't work for a home converted into separate flats.
What counts towards the £7,500
Your gross receipts, before any costs. That's the rent plus anything you charge for meals, cleaning, laundry, heating or other services. The limit is the same even if you only let for part of the year. Count the tax year, 6 April 2025 to 5 April 2026. If you moved home during the year, add the rent from both homes.
Under the limit: nothing to do
If your gross receipts are £7,500 or less (or £3,750), the income is automatically tax-free. You don't need to do anything. It doesn't on its own mean you need a tax return.
If you're filing a return anyway, put "X" in box 4 of the UK property pages (SA105). If the room is your only letting, you don't need to fill in the rest of those pages.
One exception: if your costs were more than your rent and you made a loss, you can choose to be taxed the normal way instead, so the loss can be used later. You have to tell HMRC within the time limit below.
Over the limit: two methods
If your gross receipts are more than £7,500 (or £3,750), you must send a tax return. You then pay tax using whichever method you choose:
Method A: normal profit
Receipts minus your actual expenses and capital allowances. HMRC uses this unless you tell it otherwise.
Method B: Rent a Room
Receipts minus £7,500 (or £3,750). You can't deduct any expenses or capital allowances.
Method B is usually better if your costs were low. Method A is better if your costs were more than £7,500.
Worked example
You let your spare room to a lodger for £600 a month, plus £30 a month towards bills. Your gross receipts for 2025-26 are 12 × £630 = £7,560. Your extra costs (a share of bills, insurance, a new bed) come to £1,400.
| Method A (profit) | Method B (Rent a Room) | |
|---|---|---|
| Gross receipts | £7,560 | £7,560 |
| Take off | £1,400 expenses | £7,500 allowance |
| Taxable | £6,160 | £60 |
Method B is much better. As a basic-rate taxpayer you'd pay 20% of £60, which is £12, instead of £1,232. If you charged £620 a month in total instead, your receipts would be £7,440, under the limit, and you'd have nothing to report.
Choosing Method B, and the deadline
You choose Method B by claiming it on your return (see the boxes below). Once chosen, it carries on each year until you tell HMRC you want to go back to Method A. It stops automatically in a year your receipts fall below the limit. You can switch between methods from year to year.
Time limit. HMRC's helpsheet HS223 says you must tell HMRC within one year of the 31 January after the end of the tax year. That's when you want to start or stop using Method B, or to opt out of the automatic exemption (for example, to claim a loss). For 2025-26, by that wording, that's 31 January 2028. The helpsheet's own example uses 31 January 2027 for the same year, so the safest thing is to make your choice on your 2025-26 return by 31 January 2027.
How it goes on the UK property pages (SA105)
| Your situation | What to fill in |
|---|---|
| Receipts £7,500 or less (£3,750 if shared) | Put "X" in box 4. If it's your only letting, leave the rest blank. |
| Over the limit, using Method B | Leave box 4 empty. Put your total receipts in box 20 and £7,500 (or £3,750) in box 37, "Rent a Room exempt amount". Don't claim any expenses or the £1,000 property allowance on this income. |
| Over the limit, using Method A | Leave box 4 empty. Put your total receipts in box 20 and your expenses in boxes 24 to 29, as for any letting. Leave box 37 empty. |
See our box-by-box guide to the UK property pages.
Things to watch
- You can't use the £1,000 property allowance on Rent a Room income.
- If you only let part of your home now and then, for example through short-term rental apps, GOV.UK has a tool to check if you need to tell HMRC.
- Letting part of your home can affect Capital Gains Tax relief when you sell it, especially with more than one lodger at a time.
Over £7,500? The calculator works out your tax on lodger income, compares both methods, and shows which SA105 boxes to fill in.
Work out my figures - freeSources
- GOV.UK: The Rent a Room Scheme
- HMRC: Rent a Room Scheme helpsheet HS223 (2026)
- HMRC: UK property (SA105) form and notes 2026
- GOV.UK: Tax-free allowances on property and trading income
General guidance, not tax advice. The example uses the basic rate. Your own rate depends on your other income.