Rent a Room Scheme

 
Note: Some information may not apply due to COVID-19.
  • Rent a room tax free
  • Lodger allowance has increased to £7500/year
  • What are the tax relief rules?
  • Do I have to declare the income to HMRC?
  • Information updated 2020

What is the Rent a Room Scheme?

The Rent a Room scheme is a government incentive that allows landlords and live-in landlords to earn £7,500 of tax-free income every year, by letting out a spare room in their property. 

The threshold for the scheme was increased back in 2016, as the result of SpareRoom’s successful six-year campaign.

Download our full guide

How the scheme 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 Rent a Room 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

Download our full guide

Things to think about

If you usually fill out a tax return then give it some extra thought – 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, download our free guide to the rent a room scheme.

COVID-19 - how it affects renting

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