If you let a furnished room in the home you actually live in, Rent a Room relief makes the first £7,500 of rent each tax year tax-free (£3,750 if you share the income with someone else). The relief is automatic — you do not need to apply or register for it. If your lodger income is below that and you have no other letting income, you do not need to tell HMRC or file a return for it. If it is above £7,500 you must file a return, and you choose between paying tax on the excess or working out the profit in the normal way. The relief does not apply to a property you do not live in.
Who counts as a lodger
A lodger rents a room in your only or main home and shares living space with you. The relief also covers bed-and-breakfast style letting and short lets of a room, as long as it is your home. It does not cover a self-contained flat, a property you own but do not live in, or a room used as an office rather than living accommodation.
When you must tell HMRC
- Your lodger income is more than £7,500 in the tax year (or £3,750 if jointly owned).
- You have other rental income as well, which is taxed separately and usually needs a return anyway.
- You want to claim expenses instead of the relief, for example because you made a loss.
Above the threshold: two choices
Either pay tax on everything above £7,500 without deducting any costs, or ignore the relief and work out the profit from rent minus allowable expenses. The first is simpler; the second can be better if your costs are high. You choose on the return each year, and you cannot combine Rent a Room with the £1,000 property allowance on the same income.
Things that catch people out
- Moving out and continuing to let the room turns it into an ordinary let, fully taxable.
- Letting two rooms to two lodgers is still within the scheme; the £7,500 covers the total.
- A lodger in a house you own jointly halves the allowance to £3,750 each.
- Your mortgage lender and home insurer usually need to know you have a lodger.
Common questions
Does a lodger affect my council tax discount?
If you live alone and claim the 25% single-person discount, a lodger who is your main home’s second adult usually ends the discount. Check with your council.
Can I use Rent a Room on a property I let out but do not live in?
No. The relief is only for a room in the home you live in. Rent from any other property is ordinary rental income.
I earned £8,000 from my lodger. How much tax do I pay?
You would pay tax on £500 (the excess over £7,500) at your normal rate, unless working out the actual profit gives a lower figure. Either way you need to file a return.
Do I need to declare a lodger to the Home Office?
If you let a room in England you must carry out a Right to Rent check on the lodger before they move in, the same as any landlord.
This page is general information for UK landlords, not advice on your own position. Figures and rules are correct at the review date above and are re-checked after each Budget.