How much can I earn tax-free under the Rent a Room Scheme?

Up to £7,500 a year tax-free from letting a furnished room in your own home. If you share the income with someone else (for example a partner), it's £3,750 each.

Who qualifies for the Rent a Room Scheme?

You must let a furnished room in the home you live in yourself. It applies to a lodger sharing your home, not to letting a separate self-contained property.

Is a lodger the same as a tenant?

No. A lodger who shares your home is usually an excluded occupier (a licensee), not an assured shorthold tenant. That means different rules on deposits and ending the arrangement — but you still have responsibilities such as safety.

Do I need to protect a lodger's deposit?

The tenancy deposit protection rules apply to assured shorthold tenancies, not to a live-in lodger who is an excluded occupier. You should still handle any deposit fairly and keep clear records.

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The Rent a Room Scheme: £7,500 a year, tax-free

Got a spare room? Letting it to a lodger can earn you up to £7,500 a year without paying a penny of tax on it. Here's how the scheme works and what to watch for.

Written for UK live-in landlords · Last updated August 2026 · 5 min read

The quick answer: The Rent a Room Scheme lets you earn up to £7,500 a year tax-free from letting a furnished room in the home you live in. Share the income (say with a partner) and it's £3,750 each. Your lodger is usually an excluded occupier, not a tenant — so the tenancy deposit and Section 8 rules don't apply in the same way, but you still owe them a safe home.

How the scheme works

The Rent a Room Scheme is a tax relief. If you let a furnished room in your own home, the first £7,500 of that income each tax year is tax-free — you don't even need to tell HMRC if you earn under the threshold and it's your only reason to file. Go over £7,500 and you have a choice: pay tax on the amount above £7,500, or work out your profit the normal way (income minus expenses) — whichever leaves you better off.

Who qualifies

You live there too. The scheme is for a room in the home you occupy yourself — not a separate, self-contained property you let out.

The room is furnished. It applies to furnished accommodation.

It's a lodger, not a whole-home let. You're sharing your home with them, not renting them their own place.

A lodger is not a tenant — why that matters

Because a lodger shares your home, they're usually an excluded occupier (a licensee) rather than an assured shorthold tenant. In practice that means:

The tenancy deposit protection schemes don't apply in the same way (though you should still handle any deposit fairly and keep records).
Ending the arrangement is simpler than evicting a tenant — you generally give reasonable notice rather than serving a Section 8 notice.
You still owe a duty of safety — gas appliances, electrics and furnishings must be safe.

🏡 How ProPixa helps

Even a lodger comes with income to record and a room to look after. ProPixa keeps your rent-a-room income in digital form for your tax records, and files any safety paperwork in one place — so if your total income ever crosses into needing a tax return or Making Tax Digital, you're ready, not scrambling.

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Things worth checking first

Your mortgage or lease — some don't allow a lodger without consent.
Your insurance — tell your home insurer you have a lodger.
Benefits and council tax — a lodger can affect a single-person council tax discount.
A written lodger agreement — sets out rent, notice and house rules, and avoids misunderstandings.

Frequently asked questions

Do I have to tell HMRC?

If your rent-a-room income is below £7,500 and you have no other reason to file, the relief is automatic and you needn't report it. Above £7,500, you report it through Self Assessment and opt into the scheme if you want the £7,500 exemption.

Can I use it if I rent my home rather than own it?

Potentially yes — but check your own tenancy agreement first, as many prohibit subletting or taking a lodger without the landlord's written permission.

What if two of us own the home?

The £7,500 allowance is halved to £3,750 each where the income is shared between two or more people.

Does the Rent a Room Scheme cover Airbnb-style lettings?

It can apply to short-term lets of a room in your own home, but the rules and other taxes (and your mortgage/insurance terms) get more complex — take advice if you're running it as a business.

Keep your rental income tidy from day one

ProPixa records your income and keeps your paperwork in one place, ready for tax time. Free for your first two months, no card needed.

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