Rent a Room Scheme
UK tax glossary · Last reviewed: April 2026
The Rent a Room Scheme lets owner-occupiers (and some tenants) earn up to £7,500/year (£3,750 each if two people share the income) from letting furnished accommodation in their main home completely free of Income Tax. The threshold has been frozen at £7,500 since 2016/17.
If your gross receipts exceed £7,500, you choose between: paying tax on actual profit (receipts minus allowable expenses), or paying tax on receipts minus the £7,500 threshold only (the alternative basis). Pick whichever produces the lower tax bill.
Rent a Room does not apply to holiday lets, letting a property you do not live in, or lettings that make the property into a business. The scheme is opted into automatically for gross receipts under the threshold — no form is needed.
Worked example
Gross room rental income: £9,600/year. Actual expenses: £800. Option A (actual profit): £9,600 − £800 = £8,800 taxable. Option B (Rent a Room alternative): £9,600 − £7,500 = £2,100 taxable. Choose Option B — saves tax on £6,700.
Common questions
Can I use Rent a Room if I am renting myself (not an owner-occupier)?
Yes, as long as your tenancy agreement does not prohibit sub-letting. Check with your landlord. The scheme is available to tenants as well as owner-occupiers.
Does Rent a Room income affect my benefits or tax credits?
Income below the £7,500 threshold is disregarded for most purposes including Self Assessment. However, it may still count as income for benefit means tests — check with DWP or Citizens Advice for your specific situation.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.