What Is the Rent a Room Scheme?
The Rent a Room scheme is a tax exemption that lets you earn up to £7,500 per year from renting out furnished accommodation in your main home, completely tax-free. You don’t even need to tell HMRC if you stay under the limit.[1]
Who Qualifies
You can use the scheme if:[1]
- The property is your main home (you live there)
- The room is furnished
- You rent it to a lodger, or use it for short-term lets (e.g. Airbnb)
It applies whether you own or rent your home (but check your mortgage or tenancy agreement allows subletting).
The £7,500 Allowance
The £7,500 is based on gross receipts — the total amount you receive, not your profit. It includes rent, plus any amounts you charge for meals, cleaning, or laundry.[1]
If you share the income with someone else (e.g. your partner), the allowance is split: £3,750 each.
If You Earn Over £7,500
If your receipts exceed £7,500, you have two options:[2]
| Option | How It Works |
|---|---|
| Use the allowance | Pay tax only on the amount above £7,500 (no expenses claimed) |
| Claim actual expenses | Opt out of the scheme and deduct actual costs from your income |
Choose whichever gives you the lower tax bill. If your expenses are minimal, the allowance is usually better. If you have significant costs, actual expenses may save you more. Either way, you’ll need to report the income to HMRC — Income Tax filing software makes this straightforward.
What Doesn’t Qualify
The scheme does not apply to:[1]
- Unfurnished rooms
- Rooms in a separate property (e.g. a detached annexe or a second home)
- Letting a property that is not your main home
- Letting to a business as office space
Rent a Room vs the £1,000 Property Allowance
These are two different reliefs and you can’t use both on the same income:[5]
- Rent a Room: £7,500, furnished room in your main home
- Property allowance: £1,000, any property income
Rent a Room is far more generous if you qualify.
Frequently Asked Questions
How much can I earn tax-free under the Rent a Room scheme?
You can earn up to £7,500 per year tax-free from renting out a furnished room in your main home. If you share the income with someone else, the allowance is £3,750 each.
Do I need to tell HMRC about Rent a Room income?
No, provided your total receipts are £7,500 or less. You do not need to report it to HMRC or include it on a tax return.
Does the Rent a Room scheme apply to Airbnb?
Yes, as long as the room is furnished, in your main home where you live, and your total receipts stay within the £7,500 limit.
What if my Rent a Room income exceeds £7,500?
You can either pay tax only on the amount above £7,500 (without deducting expenses), or opt out of the scheme entirely and claim your actual expenses instead — whichever gives you the lower tax bill.
Further Reading
- Property Income & MTD for Landlords
- Airbnb & Short-Term Letting Tax Rules
- The £1,000 Trading & Property Allowances
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Sources
- Rent a room in your home — GOV.UK
- Rent a Room relief (HS223) — GOV.UK
- Work out your rental income — GOV.UK
- Self Assessment tax returns — GOV.UK
- Tax-free allowances on property and trading income — GOV.UK