Answers · UK 2025/26
What is Rent a Room Relief and how much can I earn tax-free in 2026?
Rent a Room Relief exempts up to GBP 7,500 of lodger income per year from income tax (GBP 3,750 if shared with another person). The property must be your main home and the room must be furnished. If income exceeds GBP 7,500, you choose between paying tax on the excess or on profit after expenses.
Full answer
Rent a Room Relief (RaR) is a tax exemption that allows homeowners and tenants (who are permitted to sublet) to earn rental income from a lodger free of income tax, up to a threshold. The threshold GBP 7,500 per year (unchanged since 2016). If two people share the letting income from the same property (e.g., a couple), each person has a threshold of GBP 3,750. The threshold is applied to gross rental receipts, not profit. Qualifying conditions -- The property must be your only or main residence -- The room must be furnished -- You must be living in the property at the time (you cannot go on holiday for a year and rent the whole house under RaR) -- Airbnb lets in your main home qualify if you remain living there What counts as Rent a Room income? Rent plus any charges for meals, laundry or other services provided to the lodger. Business use of the home (e.g., renting a room to a business) does not qualify. Above the threshold: two options If gross income exceeds GBP 7,500, you choose annually between: (a) Pay income tax on the excess above GBP 7,500 only (no deduction for actual expenses) -- simple (b) Opt out of the scheme, declare the full gross income, and deduct actual allowable expenses to arrive at taxable profit -- useful where genuine expenses are high You can change method year by year via your Self Assessment return. Renting to family Renting to a family member can qualify if it is a genuine commercial arrangement, but HMRC may scrutinise whether rent is actually paid at arm's length. Mortgage and lease implications Check your mortgage terms -- many lenders require consent to let a room. Tenants must check their lease. Neither affects the RaR tax treatment itself.
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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.