Rent a Room Relief lets you earn up to GBP 7,500 per year tax-free by letting a furnished room in your home -- whether to a long-term lodger or a short-term Airbnb guest. This guide explains the 2026/27 rules: who qualifies, how the GBP 7,500 threshold works, what to do if your rental income exceeds it, the impact on joint landlords, and how to handle platforms like Airbnb.
Rent a Room Relief is a government scheme that allows homeowners and tenants to receive rental income from a furnished room in their only or main home completely free of income tax, up to an annual threshold of GBP 7,500. The scheme has been in place since 1992 and the threshold has been fixed at GBP 7,500 since April 2016, when it was doubled from GBP 4,250.
The relief is designed to encourage people to make use of spare rooms and increase the supply of affordable lodging -- particularly in cities where housing is expensive. It applies whether you own your home or rent it (subject to your tenancy agreement permitting subletting), and whether you let to a single long-term lodger or to a series of short-term guests via platforms such as Airbnb or SpareRoom.
There is no application process for income below the threshold. The exemption is automatic: if your gross rental receipts from the furnished room do not exceed GBP 7,500 in the tax year, you simply do not include that income in your Self Assessment return (and do not need to file one for this reason alone). The relief only requires active decision-making if your income exceeds the threshold, at which point you must choose between two calculation methods.
It is important to be clear about what the threshold covers. GBP 7,500 is a gross receipts threshold -- it applies to the total amount your lodger or short-term guest pays you, including any amounts for meals, cleaning, laundry, or other services. It is not a profit figure. If your lodger pays you GBP 650 per month (GBP 7,800 per year) and you spend GBP 500 on their bills and meals, you cannot subtract those costs to bring yourself below the threshold; your gross income of GBP 7,800 already exceeds GBP 7,500, so you must choose a tax method.
For 2026/27 the Rent a Room threshold is GBP 7,500. This equates to GBP 625 per month or approximately GBP 144 per week -- broadly in line with what a lodger might pay for a furnished double room in many parts of the UK outside London and the South East. In higher-cost areas such as London, it is common for lodger rents to exceed this figure, making the choice between Method A and Method B material.
Where the property is jointly owned or jointly let by two or more people (for example, a cohabiting couple who both have a legal interest in the home), the GBP 7,500 threshold is divided equally between them. Each joint owner is entitled to a GBP 3,750 exemption. This means the total household can receive up to GBP 7,500 tax-free between them, but neither individual can claim the full GBP 7,500 if another person is also eligible. You cannot transfer your share of the threshold to your partner.
The threshold applies to the tax year as a whole (6 April to 5 April). If you only let the room for part of the year -- say six months -- the same GBP 7,500 annual threshold still applies; there is no pro-rating. A landlord who lets a room for three months and earns GBP 4,000 in that period pays no tax, even though an annualised rate would suggest income well above GBP 7,500 per year.
If your only or main home changes during the year -- for example, you buy a new home partway through the tax year and let a room in the new one -- you can still use Rent a Room Relief for the period during which letting occurs, provided the property qualifies as your main home at that time. You cannot use the relief for income earned from a property that was never your main home.
When your gross rental receipts from a furnished room exceed GBP 7,500 in a tax year, you must report the income to HMRC via Self Assessment. At this point you have a choice between two methods of calculating your taxable rental income.
Under Method A (staying within the Rent a Room scheme), you pay income tax only on the excess of your gross receipts over the GBP 7,500 threshold. If you receive GBP 9,000 in rent, your taxable amount is GBP 1,500. The simplicity of Method A comes with a trade-off: you cannot deduct any expenses -- not heating, not repairs, not a share of the mortgage interest, nothing. Method A is usually better if your expenses are low relative to your rental income.
Under Method B (opting out of the scheme), you calculate your rental profit in the normal way for property income: gross rental income minus all allowable expenses. Allowable expenses include a reasonable proportion of household bills (gas, electricity, broadband) attributable to the lodger, repairs and maintenance of the room, replacement furniture, cleaning costs, and any letting agent fees. You cannot deduct mortgage capital repayments, but you can deduct a proportion of mortgage interest (though the finance cost relief rules that restrict this to basic rate relief for residential landlords apply here). If your expenses are high -- or if your costs exceed your rental income and you want to carry a loss forward -- Method B may produce a better outcome.
There is no permanent commitment to either method. You can switch between Method A and Method B from one tax year to the next by notifying HMRC via your Self Assessment return. The deadline to elect for Method B (to opt out of the scheme) for a given tax year is the first anniversary of the 31 January filing deadline for that year -- so for 2026/27 the deadline is 31 January 2029. However, filing your return on time using Method B is the simplest approach.
A worked example: you let a furnished room for GBP 8,400 per year (GBP 700 per month). Your allowable expenses (proportion of bills, wear and tear, repairs) total GBP 2,200.
In this example Method A is clearly better. Now suppose your expenses are GBP 5,800 (perhaps you have a high proportion of bills or significant repair costs). Method B gives taxable profit of GBP 2,600 and a tax bill of GBP 520, while Method A still gives GBP 900 taxable and GBP 180 tax -- so Method A still wins. Method B only wins where your expenses exceed the GBP 7,500 threshold, which is uncommon unless you have very high costs or the room is let for only part of the year at a high nightly rate.
Rent a Room Relief applies to short-term furnished letting just as it does to long-term lodgers, provided the room is in your only or main home and you continue to live there during the letting periods. A homeowner who lists a spare bedroom on Airbnb and hosts guests while living in the rest of the house qualifies for the scheme on exactly the same basis as someone with a permanent lodger.
The GBP 7,500 threshold applies to your total rental receipts across all short-term lettings in the tax year -- not per booking and not per platform. If you earn GBP 3,000 from Airbnb, GBP 2,500 from SpareRoom, and GBP 1,500 from a private arrangement, your gross total is GBP 7,000 and you remain within the threshold. But if your total across all platforms and arrangements reaches GBP 7,501, you must choose Method A or Method B.
The critical distinction for short-term let hosts is between renting a room (qualifying) and renting the whole property while you are away (not qualifying). If you go on holiday for two weeks and rent out your entire home, the income from those two weeks does not qualify for Rent a Room Relief. It would instead be assessed as normal rental income, or potentially as a Furnished Holiday Let if the property meets additional qualifying conditions (available for 210 days per year, actually let for 105 days, and so on). Many Airbnb hosts do both -- host while at home (qualifying income) and let the whole property while away (non-qualifying income) -- and must separate the two types of income carefully in their tax return.
Airbnb provides a summary of your annual earnings through the platform, which you can download from your host dashboard. This is a useful starting point but remember that the figure Airbnb shows may include service fee deductions. For Rent a Room purposes, HMRC is interested in the gross amount paid by the guest before platform fees are deducted -- check whether your Airbnb earnings summary shows gross receipts or net-of-fees amounts and adjust accordingly.
The Rent a Room scheme applies specifically to furnished accommodation. A room let entirely unfurnished does not qualify. HMRC does not prescribe a minimum standard of furnishing, but the room must contain at least the basic furniture needed to use it as living accommodation -- a bed, storage, and a means of sitting. Letting a bare room and expecting the tenant to bring all their own furniture would not qualify.
In practice, most furnished room lettings qualify without difficulty. The key requirement is that the letting is of a furnished room within your home -- not a self-contained flat, annex, or separate dwelling, even if it shares a wall or garden. A granny annexe with its own front door, kitchen, and bathroom that is entirely self-contained is unlikely to qualify as a room in your home; it would instead be treated as a separate property for rental income purposes. A room with an en-suite bathroom is fine; a room with a kitchenette may be borderline and depends on the degree of separation from the rest of the house.
The difference between a lodger and a tenant matters for the occupier\'s legal rights but not for the tax position. A lodger -- someone who shares living space and facilities with the resident owner and can be asked to leave with reasonable notice -- has no security of tenure under housing law. A tenant with exclusive possession of a self-contained area (even within your home) may have full assured shorthold tenancy rights. As the resident landlord you are exempt from the usual notice requirements for assured shorthold tenancies if your lodger does not have exclusive occupation of a separate part of your home; you can serve a reasonable notice to quit and then the occupier must leave without needing a court order.
If you are a tenant subletting a room, check your lease. Most assured shorthold tenancy agreements prohibit subletting without the landlord\'s written consent. Subletting without consent can be grounds for eviction. Some newer tenancy agreements -- particularly in build-to-rent developments -- specifically permit one lodger. Social housing tenants should be aware that subletting or taking in a lodger without permission from the council or housing association can jeopardise their tenancy. If permission is given, the Rent a Room threshold applies in exactly the same way.
If your Rent a Room income exceeds the GBP 7,500 threshold and you choose Method A, the excess is added to your other income for the year and taxed at your marginal rate. For a basic rate taxpayer in 2026/27, that means 20% on income between GBP 12,571 and GBP 50,270. For a higher rate taxpayer, the excess is taxed at 40% on income above GBP 50,270. National Insurance is not charged on rental income regardless of the method used.
The personal allowance of GBP 12,570 for 2026/27 can be applied against your total income including Rent a Room excess if you are not using it fully elsewhere. For example, a part-time worker earning GBP 10,000 from employment and GBP 8,000 from letting a room (Method A excess = GBP 500) has total income of GBP 10,500, which is below the personal allowance. No income tax is payable.
The personal allowance starts to be withdrawn at GBP 1 for every GBP 2 of income above GBP 100,000. Rental income (whether Rent a Room excess or ordinary rental profit) counts towards the income that triggers this taper. A higher earner with salary of GBP 98,000 who also has Rent a Room excess of GBP 5,000 would have total income of GBP 103,000, losing GBP 1,500 of their personal allowance. The effective marginal rate on income in this band is 60%. Such taxpayers should model both Method A and Method B carefully.
If you use Method B and your rental expenses exceed your rental income, you make a rental loss. Rental losses from residential property cannot be set against non-property income but can be carried forward indefinitely and set against future rental profits from the same or other rental properties. Switching from Method B to Method A in a subsequent year does not erase a carried-forward loss, but the loss can only be used against income calculated under Method B in a later year.