The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.
You can let out a room or an entire floor.
How it works
The tax exemption is automatic if you earn less than the threshold. This means you don’t need to do anything.
You must complete a tax return if you earn more than the threshold. From 6 April 2016, this is £7,500. For the 2015 to 2016 tax year, the threshold was £4,250.
You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.
You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.
Read the Rent a Room helpsheet for more detailed information on how to complete the form, and when it makes sense to opt out of the scheme.
You can opt in to the scheme at any time if:
- you’re a resident landlord, whether or not you own your home
- you run a bed and breakfast or a guest house
You can’t use the scheme for homes converted into separate flats.