Rent a Room Scheme Calculator
How the Rent a Room Scheme Works
The Rent a Room scheme allows owner-occupiers and tenants to receive up to £7,500 per year tax-free from letting furnished accommodation in their only or main home. The allowance is halved to £3,750 if two people share the rental income from the same property.
If your gross lodger receipts exceed £7,500, you have two choices:
- Method 1 (Rent a Room): Pay tax on the amount above £7,500 only.
- Method 2 (Actual expenses): Opt out and pay tax on profit (income minus allowable expenses).
You should choose whichever method results in the lower tax bill. Use this calculator to compare both options.
Frequently Asked Questions
What is the Rent a Room allowance 2026?
The Rent a Room allowance for 2026 remains £7,500 per year (or £3,750 each if you share the income with a partner). This threshold has not changed since 2016. If your gross lodger income is at or below £7,500, you pay no tax at all and do not need to declare it on a self-assessment return unless you want to offset losses. If income exceeds £7,500, you can choose between two methods: pay tax only on the excess over £7,500, or opt out and use the standard actual expenses method.
Who can use the Rent a Room scheme?
You can use the Rent a Room scheme if you let out a furnished room in your only or main home — whether you own or rent the property. You must live in the property yourself; you cannot use it for a property you rent out entirely. Holiday lets do not qualify unless the property is your main home during the let. Landlords renting out an entire property (not their home) cannot use this scheme.
Do I need to declare lodger income?
If your total gross lodger receipts are £7,500 or less, you are automatically exempt under the Rent a Room scheme and do not need to declare this income to HMRC. However, if you normally complete a self-assessment return, you should still tick the Rent a Room box to confirm exemption. If your income exceeds £7,500, you must register for self-assessment and declare it.
Can I use Rent a Room if I rent my home?
Yes, the Rent a Room scheme applies whether you own your home or are yourself a tenant. However, you must check your own tenancy agreement, as many landlords prohibit sub-letting or require permission first. If your tenancy forbids sub-letting and you take in a lodger, you could breach your contract and face eviction, regardless of the tax position. Always get written permission from your landlord before taking in a lodger.
What expenses can I deduct from lodger income?
Under the actual expenses method (opted out of Rent a Room), you can deduct a proportion of your mortgage interest (basic-rate relief only under Section 24), council tax, utilities (gas, electricity, water), buildings and contents insurance, and cleaning costs. The proportion should reflect the lodger’s share of the property (typically by rooms). Keep all receipts as HMRC may request evidence.