Rent-a-Room Scheme

Q: Does the Rent-a-Room Scheme apply to Airbnb income?

Yes, if you are letting a furnished room in your own home (the home you live in). If you let an entire separate property through Airbnb, the Rent-a-Room Scheme does not apply — you would need to report the income as normal property income. See our Airbnb hosting tax guide.

Key facts

You can earn up to £7,500 per year tax-free from letting furnished accommodation in your own home.
The scheme is automatic — you do not need to apply or register (unless you need to opt out).
It covers furnished rooms in your main residence only — not separate flats or properties you do not live in.
If you share the income with another person (e.g. a partner), the threshold is £3,750 each.
You cannot claim expenses if you use the Rent-a-Room Scheme — the £7,500 allowance replaces all deductions.

Overview

The Rent-a-Room Scheme lets you earn up to £7,500 per year tax-free from letting furnished accommodation in your own home. It is designed to encourage people to make use of spare rooms and increase the supply of affordable accommodation.^[1]

The scheme is automatic. If your gross receipts from letting furnished rooms in your home are £7,500 or less, you have no tax to pay and nothing to report.

Who Qualifies?

To use the Rent-a-Room Scheme, you must:^[1]

Let furnished accommodation in your own home (the home you live in)
Be a resident occupier — you must live in the property at the same time as your lodger

The scheme covers:

Rooms let to lodgers
Rooms let via platforms like Airbnb or SpareRoom (provided it is your own home)
Income from providing meals, laundry, or cleaning as part of the letting

What Does NOT Qualify?

Letting a separate self-contained flat (even if it is attached to your home)
Letting a property you do not live in
Letting unfurnished rooms
Using a room as an office (for your lodger’s business, for example)

How the Scheme Works

Scenario	Gross Receipts	Tax Treatment
Below threshold	£7,500 or less	Tax-free. Nothing to report.
Above threshold (Option A: Rent-a-Room)	Over £7,500	Pay tax on gross receipts minus £7,500. No expenses allowed.
Above threshold (Option B: standard method)	Over £7,500	Pay tax on rental profit (income minus actual expenses).

Worked Example

You let a furnished room and receive £10,000 gross rent. Your actual expenses (utilities, cleaning) are £3,500.

Method	Taxable Amount
Rent-a-Room (Option A)	£10,000 − £7,500 = £2,500
Standard method (Option B)	£10,000 − £3,500 = £6,500

In this case, the Rent-a-Room method gives a lower taxable amount (£2,500 vs £6,500). However, if your expenses were £8,000, the standard method would give a taxable amount of only £2,000 — making it the better choice.

Tip: If your gross receipts exceed £7,500, calculate both options and choose whichever gives you the lower taxable amount. You can change your choice each year.

Shared Threshold

If two or more people receive income from letting rooms in the same property (e.g. a couple who both own the home), the £7,500 threshold is split equally. Each person has a threshold of £3,750.^[1]

Opting In and Out

The scheme is automatic for receipts of £7,500 or less. If your receipts exceed £7,500 and you want to use the scheme (Option A), you must opt in on your Self Assessment return. If you want to use the standard method instead (Option B), you opt out by completing your SA105 as normal.^[2]

Rent-a-Room vs Property Income Allowance

The £1,000 property income allowance is a separate relief. You cannot use both on the same income. If you qualify for Rent-a-Room, it is almost always the better option because the threshold is £7,500 vs £1,000. The property allowance is more useful for income from properties you do not live in (e.g. occasional Airbnb lets of a separate property).

Impact on Other Tax Reliefs

Using the Rent-a-Room Scheme does not affect your entitlement to Private Residence Relief (PRR) for CGT purposes. Your main home remains exempt from CGT even if you let a room in it, although lettings relief may be relevant if you later sell.

Frequently Asked Questions

Does the Rent-a-Room Scheme apply to Airbnb income?

Yes, if you are letting a furnished room in your own home (the home you live in). If you let an entire separate property through Airbnb, the Rent-a-Room Scheme does not apply — you would need to report the income as normal property income. See our Airbnb hosting tax guide.

Can I use Rent-a-Room if I am a tenant myself?

Yes, provided your tenancy agreement allows subletting and you let a furnished room in the home you live in. The scheme applies to tenants who take in lodgers, not just homeowners.

What if my Rent-a-Room income exceeds £7,500?

If your gross receipts exceed £7,500, you have two choices: (1) pay tax on the amount above £7,500 with no expense deductions, or (2) opt out of the scheme and report your income and expenses normally on the SA105. Choose whichever gives you the lower tax bill.

Can I use both Rent-a-Room and the £1,000 property allowance?

No. You cannot use both reliefs on the same income. If you qualify for Rent-a-Room, you must choose between the two. Since £7,500 is much more generous than £1,000, Rent-a-Room is usually the better option for lodger income.

Sources

Rent a Room in your home — GOV.UK
Rent a Room Scheme: detailed guidance — GOV.UK
Property Income Manual: PIM4001 – Rent a Room — HMRC

The Rent-a-Room Scheme