The Rent a Room Scheme, explained
The Rent a Room Scheme lets you earn up to £7,500 a year tax-free from letting furnished accommodation in your own home. The limit halves to £3,750 if someone else also receives income from letting in the same property. Below the limit the exemption is automatic; above it you must complete a tax return (GOV.UK: the Rent a Room Scheme).
Who can use the Rent a Room Scheme?
You can use the scheme if you let furnished accommodation in your only or main home. It covers owner-occupiers and tenants, and also people who run a B&B or guest house (GOV.UK). You can let as much of your home as you like.
HMRC's Rent a Room helpsheet (HS223) says you cannot use it if the accommodation:
- is not part of your main home when you let it
- is not furnished
- is used as an office or for any business
You also cannot use it for a home converted into separate flats (GOV.UK). A lodger who works from home in the evenings or at weekends, or a student you give space to study, does not stop you using it (HS223).
How the £7,500 and £3,750 limits work
The limit applies to your gross receipts for the tax year (6 April to 5 April), not your profit. HMRC says gross receipts include the rent before expenses, plus payments for meals, goods and services such as cleaning or laundry (HS223).
The limit reduces to £3,750 if someone else receives income from letting accommodation in the same property, for example a joint owner. It depends on who receives income from the property, not on how many lodgers you have.
If your receipts are over the limit
You must complete a tax return (GOV.UK). HMRC gives you two ways to work out the tax (HS223):
- Method A: pay tax on your actual profit, meaning receipts minus expenses and capital allowances. HMRC uses this unless you choose Method B.
- Method B: pay tax on gross receipts minus £7,500 (or £3,750). You cannot deduct any expenses.
| Situation | Gross receipts | Your limit | What is taxable |
|---|---|---|---|
| One lodger at £550 a month, you are the only person receiving the rent | £6,600 | £7,500 | Nothing. The exemption is automatic. |
| Lodger at £600 a month plus £50 a month for meals and laundry | £7,800 | £7,500 | Method B: £300 (£7,800 minus £7,500), no expenses. Method A: £7,800 minus your actual expenses. |
| Same lodger, real expenses of £1,000 for the year | £7,800 | £7,500 | Method A: £6,800. Method B: £300. Method B is lower here. |
| Joint owners, each receiving £4,000 | £4,000 each | £3,750 each | Method B: £250 each. Method A: each share minus actual expenses. |
These figures show how the methods compare. They are not a tax calculation, and the tax you pay depends on your other income. This guide is not tax or legal advice.
How to opt in or opt out
If your receipts are under the limit, you do not need to do anything. The exemption is automatic (GOV.UK).
If your receipts are over the limit, you claim the allowance by choosing Method B on your tax return. Otherwise HMRC treats you under Method A.
You might want to opt out when you are under the limit, for example if your expenses are higher than your rent and you want to record a loss. Under the scheme you cannot create a loss (HS223).
Deadline for telling HMRC
To opt out while under the limit, or to start or stop using Method B, you must tell HMRC within one year of 31 January following the end of the tax year. For the tax year ending 5 April 2026, that is 31 January 2027. HMRC extends this only in limited cases, such as serious illness (HS223). Method B stops automatically in a year when your receipts fall below the limit.
Lodger or tenant: why it matters
GOV.UK says you are a resident landlord if you let part of a property that is your only or main home (GOV.UK). What your lodger can do when the letting ends depends on whether you share living space (GOV.UK: your lodger's tenancy type):
- Excluded occupier: likely if you or a member of your family share a kitchen, bathroom or living room with them. You give reasonable notice, usually the length of the rent period, and do not need to go to court.
- Occupier with basic protection: likely if they do not share any living space with you or your family. You serve a written notice to quit, and need a court order if they will not leave (GOV.UK: ending a letting).
Sharing living space also decides which safety regulations apply, as the next section shows. The Rent a Room tax rules do not depend on this, as long as the accommodation is furnished and part of your main home.
Checks that still apply with a lodger
A lodger brings fewer rules than a tenant, but not none.
| Check | Applies? | Source |
|---|---|---|
| Right to Rent | Yes, before the letting starts | GOV.UK Right to Rent checks |
| Annual gas safety check | Yes, if you have gas appliances | HSE landlord gas FAQs |
| Keep the home safe and in good repair | Yes | GOV.UK: renting out a room |
| 5-yearly electrical report (EICR) under the 2020 regulations | No, if the lodger shares accommodation with you or your family | SI 2020/312, Schedule 1 |
| Smoke and carbon monoxide alarm regulations | No, if the lodger shares accommodation with you or your family | SI 2015/1693, Schedule |
Both the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 and the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 exclude a tenancy where the occupier shares any accommodation with the landlord or a member of the landlord's family. Sharing means using an amenity in common, such as a kitchen or bathroom. A shared staircase, corridor or storage area does not count on its own.
The exclusion only means those regulations do not apply. Working smoke and carbon monoxide alarms and safe wiring still protect you and your lodger.
Our page on renting a room to a lodger shows which checks BeCert tracks for a shared home, and the free compliance checker shows which checks apply to yours.
Other things to tell people about
- Council tax: you must tell your council if having a lodger means you are no longer entitled to a single person discount (GOV.UK).
- Capital Gains Tax: you may owe it when you sell if you have let all or part of your home, though Private Residence Relief and Letting Relief may apply (GOV.UK).
- Short-term guests: if you let a room only occasionally, for example through short-term rental apps, GOV.UK says to check whether you need to tell HMRC about the income (GOV.UK). In London, see our guide to the 90-night rule.
- More than one lodger: your home may be classed as a house in multiple occupation if you let rooms to more than 2 people (GOV.UK). See our page for HMO landlords.