Up to £7,500/year tax-free from letting furnished accommodation in your main home, under Part 7 Chapter 1 of the Income Tax (Trading and Other Income) Act 2005. Automatic below the threshold; above it you choose between the default basis (tax on excess only) and the alternate basis (normal property rules with expenses).
What to do at each income level
| Scenario (gross income from lodger) | Default basis | Alternate basis |
|---|---|---|
| £7,500 or less per tax year | Automatic; no tax, no Self Assessment entry needed | Not applicable |
| Above £7,500 per tax year | Tax on income above £7,500; no expenses claim | Taxed as normal property income with allowable expenses (wear and tear, utilities, insurance); declare on SA105 |
| Income split with a co-owner | Threshold halves to £3,750 each | Threshold halves to £3,750 each |
Who qualifies?
You must be the homeowner or a tenant (with the landlord's permission to sublet), the property must be your only or main home for at least part of the time the lodger is there, and the room must be furnished. The relief applies to one home only; lodger income from a second property is taxed normally as rental income. Short-term lets (Airbnb, Vrbo) qualify provided the property is your only or main home for the period the guest stays.
Why keep rent receipts if I owe no tax?
HMRC can still ask you to demonstrate that the income falls within the relief. A simple set of monthly rent receipts is the cleanest documentary evidence and free to produce. The payment receipt article covers the minimum useful contents.
In 5 steps
How to Claim UK Rent-a-Room Relief
Step-by-step: confirm eligibility for the Rent-a-Room scheme, decide between the £7,500 default exemption and the alternate-basis calculation, declare on Self Assessment, and keep the records HMRC expects.
- 1
Confirm you qualify
You qualify if you let furnished accommodation in your only or main home in the UK. The relief applies to rental income from a lodger or paying guest, not to a separate flat or unfurnished space.
- 2
Calculate gross receipts for the tax year
Add up everything received from the lodger — rent, plus any contribution to bills, meals, or services. The £7,500 threshold is on gross receipts, not net profit. Halved to £3,750 if two people share the income (e.g. joint owners).
- 3
Choose default vs alternate basis
If gross receipts are at or below £7,500, the default basis applies automatically — no tax, no reporting needed. If receipts exceed £7,500, you choose between paying tax on the excess above £7,500 (default basis) or on actual profit after expenses (alternate basis). Run both numbers; pick the lower.
- 4
Declare on Self Assessment if required
Receipts above £7,500 must be reported on the property pages (SA105) of your Self Assessment return. Below £7,500 with default basis: nothing to report. Use the HS223 Rent-a-Room helpsheet for the alternate-basis calculation.
- 5
Keep rent receipts and records
Even when no tax is due, HMRC can ask you to demonstrate the income falls within Rent-a-Room. Keep monthly rent receipts and bank-statement evidence of payments received for at least 5 years after the 31 January deadline.
Primary sources
- Rent a Room Scheme — gov.uk — Official HMRC overview of the £7,500 relief
- Rent a Room Scheme (HS223 Self Assessment helpsheet) — gov.uk — How to declare on Self Assessment, alternate vs default basis
- Income Tax (Trading and Other Income) Act 2005, Part 7 Chapter 1 — legislation.gov.uk — Statutory basis for the Rent-a-Room relief
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