Rent a Room: £7,500 a year tax-free for a room in your own home

The Rent a Room Scheme lets a homeowner or a tenant let a furnished room in their own home and pay no tax on up to £7,500 of that income a year. If the income is shared with someone else, the threshold is halved to £3,750.

Who counts as a resident landlord?

GOV.UK is direct about it: you are a resident landlord if you let out part of a property which is your only or main home. You do not have to own it — the scheme is open to tenants who live in the property and take in a lodger.

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It is also open to people running a bed and breakfast or a guest house from their home.

Who cannot use the scheme?

GOV.UK names one clear exclusion: you cannot use the scheme for homes converted into separate flats. Letting a self-contained flat inside your building does not qualify — the scheme is about a room in the home you live in yourself.

The second limit is furnishing. The scheme is described as covering furnished accommodation, so an unfurnished room falls outside it.

How much can you earn tax-free?

The threshold is £7,500 a year. You can let out as much of your home as you want: the limit is on the income, not on the number of rooms. If you share the income with another person, a spouse or a co-owner, each of you gets £3,750.

One detail saves a lot of time: if you earn below the threshold, the exemption applies automatically and you do not need to do anything — no notification to HMRC, no tax return.

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What if you earn more than the threshold?

Then you must complete a Self Assessment tax return, and on it you choose between two routes.

Either you opt into the scheme and claim the allowance, so you are taxed only on what exceeds £7,500. Or you opt out and record your rental income and expenses on the property pages of the return instead. The second route makes sense when your costs on the let room are high enough to beat £7,500; HMRC's helpsheet sets out when that is the case.

What duties come with it?

A resident landlord is responsible for keeping the property safe and in good repair. That is not a formality — it covers electrics, gas appliances and the general state of the home.

In exchange, a lodger has fewer rights than an ordinary tenant: they cannot challenge the agreed rent, and you can give less notice to end the letting than if you rented out the whole property. GOV.UK advises asking potential lodgers for references before signing any agreement.

What does it mean for the lodger's rights?

GOV.UK treats this as an excluded tenancy or licence: the case where you live in the same property as your tenant and share rooms with them, like a kitchen or bathroom. With that type of agreement, as the page puts it, your tenant will usually have less protection from eviction.

The formal reason sits on the same page: the most common agreement, an assured periodic tenancy, arises only if you do not live in the property. Once you live there yourself, it does not apply.

What to check before taking a lodger in

Three things, all of them settled before anyone moves in. First, whether your own agreement allows a lodger, if you are renting yourself: that question goes to your landlord, not to the lodger. Second, references: GOV.UK advises asking for them before signing any agreement. Third, the state of the property: safety and repair sit with you as the resident landlord, and that is an obligation rather than a preference.

Check the figures on GOV.UK before you commit: the £7,500 threshold has been stable for years, but the reporting rules are revised from time to time.