The Rent a Room scheme: £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, and below that you don't have to tell HMRC at all.
Updated 28 September 2026 · Allowance unchanged at £7,500 for 2026/27
Who can use it
- You let furnished accommodation in your main home to a lodger: a room, or a whole floor.
- You can own the home or rent it (check your tenancy allows lodgers).
- It can also cover a bed and breakfast or guest house you run from your home.
It doesn't apply to a separate, self-contained flat you let as a normal tenancy, to letting a home you don't live in, or to renting part of your home as an office.
The limit: £7,500, or £3,750 if you share it
The £7,500 is per home, not per person. If someone else also gets income from letting in the same home, for example your partner, you each get £3,750.
The limit applies to your gross receipts: rent plus anything you charge for meals, cleaning, laundry or bills. It's not the profit.
If you're under £7,500
It's automatic. You don't pay tax on it and you don't need to report it. If you already file a Self Assessment return for other reasons, you don't need to include it.
If you go over £7,500
You must file a Self Assessment return (register by 5 October after the tax year if you don't already), then choose the better of two methods:
- Rent a Room method: pay tax on your receipts above £7,500. No expenses can be deducted.
- Normal method: pay tax on your actual profit, receipts minus the lodger's share of expenses like utilities, insurance and wear and tear.
For most lodgers the Rent a Room method wins unless your real costs are more than £7,500. You can switch each year.
Example
| Rent a Room method | Normal method | |
|---|---|---|
| Receipts for the year | £9,600 | £9,600 |
| Deduct | £7,500 allowance | £2,100 of expenses |
| Taxable | £2,100 | £7,500 |
Things to know
- A lodger normally doesn't affect your Capital Gains Tax relief on the home.
- If you pay council tax with a single person discount, having a lodger over 18 usually ends it.
- Tell your mortgage lender and home insurer.
Know where you stand against £7,500
The UK Rent a Room Tracker logs what your lodger pays, shows how close you are to the limit and compares both methods so you pick the cheaper one. Excel + Google Sheets.
See the Rent a Room TrackerGeneral information, not tax advice. See "Rent a Room Scheme" on GOV.UK.