Rent a Room scheme: earn £7,500 a year tax free (2026/27)
How the Rent a Room scheme works in the UK: the £7,500 tax-free limit, who qualifies, lodgers vs Airbnb guests, what happens if you earn more, and the April 2027 property tax changes.
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How the Rent a Room scheme works
The scheme lets you earn up to £7,500 a year from letting furnished accommodation in your only or main home, without paying any tax on it. It is applied automatically, so if your income is under the limit there is nothing to report.
The £7,500 is the total you receive, before any expenses. That includes anything you charge for meals, cleaning or laundry.
Who qualifies
You can use the scheme if:
- The room is in your only or main home. You can own or rent it, but if you rent, check your tenancy allows lodgers.
- The room is furnished.
- You live there while the room is let.
It does not cover:
- A separate, self-contained flat that is not part of your home
- Unfurnished rooms
- Space used as an office or for business
- Your home if you let it while you live elsewhere, including abroad
Lodgers, students and guests staying in your home through sites like Airbnb can all count, as long as the rules above are met. Read HMRC's Rent a Room helpsheet if you are not sure.
Sharing the income
If someone else also receives rent from the same property, such as a joint owner or partner, the limit is halved to £3,750 each.
If you earn more than £7,500
You must register for Self Assessment and choose one of two methods each year:
| Method | How it works | Best when |
|---|---|---|
| A: normal profit | Pay tax on rent minus actual expenses | Your expenses are more than £7,500 |
| B: Rent a Room | Pay tax on everything over £7,500, with no expense deductions | Your expenses are less than £7,500 |
Example: you receive £9,600 a year from a lodger and spend £1,500 on extra bills.
- Method A: £9,600 − £1,500 = £8,100 taxable
- Method B: £9,600 − £7,500 = £2,100 taxable
Method B wins by a long way, which is usual for lodgers.
Tax on property income from April 2027
The October 2026 Budget raises income tax on property income from 6 April 2027 to 24% for basic rate, 44% for higher rate and 49% for additional rate taxpayers. Income covered by the Rent a Room scheme stays tax free, which makes the scheme even more valuable.
Before you take in a lodger
- Check your mortgage or tenancy. Lenders and landlords usually need to agree.
- Tell your home insurer.
- Council tax: if you lived alone and got the single person discount, you will lose it.
- Use a written lodger agreement and do right to rent checks in England.
- Benefits: income from a lodger can affect means-tested benefits, so check first.
Common questions
Do I have to tell HMRC about my lodger?
Not if you receive £7,500 or less a year and you are not already filing a tax return. Over the limit, you must register for Self Assessment.
Can I use Rent a Room for Airbnb?
Yes, if guests stay in a furnished room in your own main home. It does not apply if you let a whole property you do not live in.
Can I use Rent a Room and the property allowance together?
Not on the same income. The £1,000 property allowance is for other property income, such as a parking space or a property that is not your home.
This is general information, not personal tax or financial advice. Tax rules change and depend on your circumstances, so check GOV.UK or speak to an accountant before acting.