The short version: The Rent a Room scheme lets you earn up to £7,500 a year tax free from renting out a furnished room in your home. If you stay under that threshold, you don’t even need to tell HMRC.
Who can use it?
Anyone who lets out furnished accommodation in their main home. It works for lodgers, Airbnb guests, or anyone staying in a room while you live there too.
What if you earn more than £7,500?
You have two options. Either claim the £7,500 as a flat allowance and pay tax on everything above it, or skip the scheme and calculate your actual expenses instead. Whichever gives you the lower tax bill.
Can you use it with other reliefs?
No. You can’t combine Rent a Room with the Property Income Allowance on the same income. Pick one.
What doesn’t qualify?
It has to be your main home. Renting out a separate property doesn’t count. And the room must be furnished.
Thinking about taking in a lodger or listing on Airbnb? Ask us how the tax works.
