United Kingdom Rent a Room Scheme
The Rent a Room Scheme covers furnished accommodation let in the landlord’s own home. Shared rental income reduces the threshold, while tax-return choices determine how income is reported.
- Annual threshold
- £7,500 per year.
- Shared-income threshold
- £3,750 per year.
The threshold and sharing rule
The Rent a Room Scheme allows up to £7,500 per year tax-free from letting out furnished accommodation in the landlord’s own home. The threshold is halved to £3,750 if the income is shared with someone else. HMRC, Rent a Room Scheme (opens in a new tab).
Eligibility and automatic exemption
Resident landlords can opt into the scheme whether or not they own their home. People running a bed and breakfast or guest house can also opt in. Homes converted into separate flats cannot use the scheme. HMRC, Rent a Room Scheme (opens in a new tab).
The exemption is automatic when income is below the applicable threshold. Income above the threshold requires a tax return. HMRC, Rent a Room Scheme (opens in a new tab).
Opting in or out
Below the threshold, a taxpayer can elect for the exemption not to apply so that the normal normal calculation is used. This election covers one year only and must be made in writing to HMRC; appropriate entries on the tax return suffice without a special form. HMRC, Rent-a-room elections (opens in a new tab).
The time limit for making or withdrawing an election is one year from 31 January following the year of assessment. An election to calculate profit as gross receipts minus the individual’s limit continues until withdrawn or receipts fall below that limit. Using the other method in a later return is treated as withdrawal. HMRC, Rent-a-room elections (opens in a new tab).
Where income exceeds the threshold, the scheme’s tax-free allowance can be claimed by opting in on the tax return. Alternatively, income and expenses can be recorded on the property pages without opting into the scheme. HMRC, Rent a Room Scheme (opens in a new tab).
Scope
This guide provides general information only. It does not assess individual tax liability or benefit entitlement and contains no worked example.