Letting a furnished room in your home? The Rent a Room Scheme lets you earn up to £7,500 a year completely tax-free. Enter your rent and other income to see what's tax-free and what (if anything) you owe.
Lodger income · £7,500 allowance · 2026/27
The Rent a Room Scheme lets you earn up to £7,500 a year tax-free from letting furnished accommodation in your own home — typically a lodger or a spare room. The allowance is frozen at £7,500 for 2026/27 and applies automatically; you don't even have to tell HMRC if your receipts are below it.
| Situation | Tax-free allowance 2026/27 |
|---|---|
| Single person letting a room | £7,500 |
| Two people sharing the income | £3,750 each |
| Income below the allowance | 0% — nothing to declare |
Go over the threshold and you have two choices. Method A: pay tax on the amount above £7,500 with no deduction for expenses. Method B: opt out of the scheme and pay tax on your actual profit (rent minus allowable expenses) — better if your costs are high. Our calculator uses Method A, which is usually the simplest and best for low-cost lettings.
Lodger income above the allowance is added to your other earnings and taxed at your marginal rate, so a higher-rate taxpayer pays 40% on the excess. See how your overall position looks with the income tax calculator and the salary calculator.
Up to £7,500 a year is tax-free under the Rent a Room Scheme in 2026/27. If two people share the income the allowance is £3,750 each.
No — if you're under £7,500 the relief is automatic and there's nothing to declare. Above £7,500 you must file a Self Assessment return.
You pick the cheaper of: paying tax on the income above £7,500, or opting out and paying on actual profit after expenses.
Yes — furnished short-term lets in your main home qualify, sharing the same £7,500 annual allowance.
