The Rent a Room Scheme

Archived article from 2018. Rates, thresholds and rules may have changed since then. Ask us for the current position before you act on it.

The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

You can let out as much of your home as you want.

How it works

The tax exemption is automatic if you earn less than the threshold. This means you don’t need to do anything.

You must complete a tax return if you earn more than the threshold. From 6 April 2016, this is £7,500. For the 2015 to 2016 tax year, the threshold was £4,250.

You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.

You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.

Eligibility

You can opt in to the scheme at any time if:

• you’re a resident landlord, whether or not you own your home
• you run a bed and breakfast or a guest house

You can’t use the scheme for homes converted into separate flats.

Source: Rent a room in your home: The Rent a Room Scheme - GOV.UK