Rent-a-Room Relief: Earn Up to £7,500 Tax-Free Letting Out a Spare Room

Rent-a-Room Relief lets you earn up to £7,500 a year tax-free from letting furnished accommodation in your own home, without telling HMRC anything if your income stays below that threshold. It is one of the most generous reliefs in UK personal taxation and applies whether you let the room long-term or short-term (Airbnb included).

Who qualifies

You must be the homeowner or a tenant (with your 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 — if you have a lodger in a second property, that income is taxed normally as rental income.

How the £7,500 limit works

If your gross rental income (before expenses) is £7,500 or less for the tax year, the relief is automatic and you don't need to do anything — you can't claim expenses against the income, but you also pay no tax on it. The limit is per property, not per lodger, and it halves to £3,750 if you split the income with someone (such as a spouse who jointly owns the home).

When you go over the limit

Over £7,500 you have a choice each tax year: pay tax on the income above £7,500 (with no expenses claim), or be taxed normally and deduct allowable expenses like wear and tear, utilities, and insurance. You declare which method on your Self Assessment return. Rent receipts become important here — without them, an HMRC enquiry can challenge how you arrived at your numbers.

Why receipts still matter

Even though you may pay no tax under Rent-a-Room, 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. payslipmaker.uk's Rent Receipt Generator can produce up to 12 months of receipts in a single PDF in under a minute.