How much can I earn under the Rent a Room Scheme?
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 drops to £3,750 if you share the income with someone else. If your earnings stay under the limit, the tax break applies automatically.
Figures checked against gov.uk on . General information, not tax advice.
At a glance
- Annual limit
- £7,500 tax-free
- If you share the income
- £3,750
- Above the limit
- File a tax return and opt in or report actual income and expenses
Above the limit
Once your earnings go over the threshold you need to file a tax return. gov.uk says you can then opt in on the return to claim the tax-free amount, or skip the scheme and report your income and expenses on the property pages. Which is better depends on how large your actual costs are.
What it does not cover
The scheme is for furnished accommodation in your home. gov.uk says it does not cover homes converted into separate flats. Because it is a separate relief, the £1,000 property allowance cannot be used on the same income.
If you let a room and also own another let property, treat them as different sources: Rent a Room for the room in your home, and the property allowance or actual expenses for the rest.