Thinking about renting a room in your home?

2nd September 2025

In the UK, if you rent out a furnished room in your home you may not have to pay any tax on the income.

Here is a quick look at the rules for anyone thinking about a little extra cash and the limits to steer clear of paying tax on it legally.

Rent a Room Scheme

You can earn up to £7,500 per year tax-free from letting out furnished accommodation in your main home.

If you share the income with someone else (e.g. spouse/partner who also owns the property), the allowance is split — so each gets £3,750.

You don't need to do anything if your rental income is below the allowance — it’s automatically tax-free.

If your income is above the allowance

You can choose to either:

Use the Rent a Room Scheme - pay tax only on the amount above £7,500.

Opt out and use normal property income rules – meaning you declare the actual rental income and deduct allowable expenses (like a share of bills, repairs, etc.), which can be better if your costs are high.

When you must declare it

If your rental income is over £7,500, you’ll need to complete a Self Assessment tax return.

If it’s under the threshold, nothing needs reporting.