Glossary · UK

What is Rent a Room Relief?

A tax exemption letting you earn up to £7,500 a year tax-free from letting a furnished room in your own home.

Full Definition

Rent a Room relief lets owner-occupiers and some tenants earn up to £7,500 per tax year tax-free from letting a furnished room in their main residence. The threshold halves to £3,750 each if the income is shared (for example between a couple or joint owners). If gross receipts are at or below £7,500 the relief is automatic and nothing need be reported; above it you choose either to pay tax on the excess over £7,500 with no expense deductions, or to be taxed normally on profit (receipts minus actual expenses), whichever is lower. The scheme covers lodgers and short-term lets within the home but not rooms let as separate self-contained flats or as offices. It has not increased since 2016/17, so longer lets often now exceed it.