Rent a Room Scheme

 

What is the Rent a Room Scheme?

Thanks to SpareRoom's successful six-year campaign, if you rent out a room in your home, you can earn up to £7,500 a year in tax-free income. This is all due to a government incentive called the Rent A Room Scheme, designed to encourage people to take in lodgers.

How it works

  • You let out a room or part of your main property (it can be a whole floor but not a self-contained flat)
  • It must be furnished – unfurnished rooms don’t qualify
  • You don’t have to be a homeowner – if you have your landlord’s consent you can use the scheme as a tenant
  • If you don’t normally fill out a tax return and the income is below £7,500 (around £625 a month), the exemption will be automatic – so don’t worry about doing anything. If the amount you earn is above the threshold, let the tax office know

Things to consider

If you usually fill out a tax return then have a think – the Rent a Room scheme doesn’t allow you to claim expenses for wear and tear, insurance etc. So if you spend more on decorating the room and keeping it in order than you make in rent, you’ll end up making a loss and won’t be liable for tax.

For more information, see our full guide to the rent a room scheme.

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