Answers · UK 2025/26
What is the Rent a Room scheme limit in 2026/27?
The Rent a Room scheme lets you earn up to GBP7,500 per year tax-free from renting out a furnished room in your own home. If you share the income with a joint owner, each person gets GBP3,750. Income above the limit is taxed as property income, but you can choose to pay tax on the excess above GBP7,500 rather than on the profit after expenses.
Full answer
The Rent a Room scheme provides a tax exemption for individuals who let out furnished accommodation in their only or main UK home. The exemption limit has been GBP7,500 per year since April 2016 and remains at GBP7,500 for 2026/27. Joint owners: if you own the property jointly and both let out part of the same home together, each owner's exemption is halved to GBP3,750. What qualifies: the accommodation must be in your main home (not a buy-to-let or second home); it must be furnished (not unfurnished rooms); it can be a lodger arrangement or a short-term letting including Airbnb; and you must live in the home yourself (not just own it). What does NOT qualify: renting out a property you do not live in; commercial B&B or guesthouses run as a trade (different rules apply); business use of the room. How the scheme works -- two options when income exceeds GBP7,500: Option 1 (default -- full deduction): pay tax on gross income minus GBP7,500. No expenses can be deducted if you choose this option. Option 2 (actual profit): pay tax on actual net profit (gross income minus all allowable expenses, same as normal property income). You switch between options each year via your Self Assessment return, choosing whichever gives the lower tax bill. If gross rent is GBP7,500 or less: the income is automatically exempt and does not need to be declared on a tax return. Interaction with Universal Credit (UC): Rent a Room income up to GBP7,500 is disregarded for UC purposes, making it attractive for those on low incomes or partial UC. Interaction with Capital Gains Tax: if you rent a room under the scheme, it does NOT affect Private Residence Relief on the eventual sale of your home (unlike renting the whole property). However, renting out more than one room, or renting to lodgers who occupy a separate part of the house, requires careful review of the PRR position. Interaction with council tax: renting to a lodger can affect your council tax discount -- for example, a single-person discount may be lost if the lodger is an adult who does not qualify for an exemption.
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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.