UK Rent a Room Calculator

A generous allowance with a hard edge

The Rent a Room scheme lets you receive up to £7,500 a year from letting a furnished room in your only or main home with no tax to pay and, often, nothing to report. It is one of the most useful reliefs in the system for anyone with a spare bedroom, a lodger, or a regular short stay arrangement under their own roof. The threshold has been frozen at £7,500 for several years and halves to £3,750 if someone else, such as a partner, also receives income from the same property. The scheme only covers letting within your home. It does not apply to a separate buy to let, to an annexe let as self contained accommodation, or to a room you let while living abroad. This calculator works out the tax once your lodger income passes that £7,500 line.

A lodger paying £10,000 a year

Suppose your lodger pays £10,000 over the year and you are a basic rate taxpayer. The first £7,500 is tax-free under the scheme. The remaining £2,500 is taxable, and because you are using the scheme you cannot also deduct expenses against it. At the 20% basic rate that is £500 of tax.

The same £2,500 excess would cost £1,000 for a higher rate taxpayer and £1,125 for an additional rate taxpayer. The chart shows the tax on that fixed £2,500 across the three rates the tool offers.

When to ignore the scheme and claim expenses instead

You are not forced to use the scheme. Each year you can choose the method that produces the lower bill. The scheme wins when your costs are low, because you simply knock £7,500 off the top with no record keeping. The alternative, ordinary property taxation, wins when your costs are high, because you pay tax only on profit after deducting a fair share of expenses such as heating, insurance, and wear of furnishings. The judgement is straightforward: if your lodger related expenses exceed £7,500, the normal method usually beats the scheme. The most common mistake I see is people staying in the scheme out of habit when a year of high costs would have left them with little or no profit to tax. You can switch methods from one year to the next, so review it annually rather than setting it once.

The £3,750 split and the main-home condition

Two rules trip people up more than any other. The first is the halving. If anyone else receives income from letting the same property, for example a spouse or partner who is a joint owner, the £7,500 allowance is split and each person gets only £3,750. It does not matter that the income may all flow into one bank account; what counts is who is entitled to it. The second is that the relief only applies to a furnished room in your only or main residence. The property has to be the home you actually live in, which is why the scheme cannot be used for a separate rental flat, and why letting the room for the whole period while you live elsewhere takes you outside it. There is one welcome flexibility: the scheme can cover bed and breakfast or guest house income, and even a home office let to a lodger who works there, provided the accommodation remains within your home.

Frequently asked

Do I have to tell HMRC if I stay under £7,500?

Usually not. If your total receipts are at or below £7,500 the relief is given automatically and you do not need to declare it or file a Self Assessment return solely for this. Once you go over £7,500, or if you choose the expenses method, you do need to report the income, normally through Self Assessment, even though much of it may still be covered.

Does this affect my single person council tax discount?

It can. Taking in a lodger who is a second adult in the property normally ends the 25% single person discount on council tax, which is a real cost that sits outside this calculator. Factor that lost discount into the decision, because for a modest rent it can meaningfully reduce the net benefit of taking a lodger at all.

One practical tip: keep the arrangement genuinely within your home and keep the room furnished. The relief hinges on both. A common slip is letting the room unfurnished or moving out yourself, either of which takes you outside the scheme and back into ordinary lettings taxation, sometimes without the landlord realising until HMRC asks.

Can I use the scheme if I rent my home rather than own it?

Yes, the Rent a Room scheme is available to tenants as well as owners, provided subletting is permitted under your tenancy agreement. You should check your lease before taking in a lodger, because many standard tenancy agreements require written landlord consent for subletting. If subletting is allowed, the same £7,500 threshold applies and the tax treatment is identical to that for owner-occupiers.

Does Airbnb or short-term letting count for Rent a Room relief?

It can, provided you are letting a furnished room within your only or main home and you remain living there during the lets. HMRC accepts that the scheme covers short-term and holiday lets of a room, not just long-term lodger arrangements. However, if you let the entire property while you are away, that moves outside the scheme and is taxed as ordinary rental income instead.