Answers · UK 2025/26
How does the Rent a Room scheme work in the UK?
The Rent a Room scheme allows you to receive up to £7,500 per year tax-free from letting a furnished room in your main residence (£3,750 if jointly owned). Income below the threshold does not need to be reported. Above it, you choose between normal taxation or the Rent a Room basis.
Full answer
The Rent a Room scheme is a government incentive to encourage homeowners and tenants (with landlord permission) to let furnished rooms in their home. Key conditions: - You must live in the property as your main home during the letting period. - The room must be furnished. - You can be an owner-occupier or a tenant (subletting) -- but check your tenancy or mortgage agreement first. - The scheme applies to rooms let for residential use -- not office space or short-term event letting. The annual threshold: - £7,500 gross rental income per year (not profit) is tax-free. - If you share the income with a partner or co-owner, the threshold halves to £3,750 each. - The £7,500 covers all income from letting rooms in the property, including any payments from lodgers for meals, laundry, or other services. Below the threshold: - No tax to pay. No need to report the income on a Self Assessment return (unless you are already filing one for other reasons). Above the threshold -- two options: Option 1: Standard property income taxation - Deduct allowable expenses (utilities apportioned, repairs, etc.) from gross rental income and pay tax on the net profit. Option 2: Rent a Room basis - Deduct the £7,500 exemption from gross income and pay tax on the remainder. No expenses can be deducted. - You elect Option 1 or 2 on your Self Assessment return each year. Short-term letting: - Airbnb-style lettings of a room in your main home also qualify for the scheme, provided the room is furnished and you live there. Limitation: - The scheme does not apply if you let your whole property while you are away.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.