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Property · HMRC scheme

Rent-a-Room Scheme Calculator

Take in a lodger and earn up to £7,500 per year tax-free under the HMRC Rent-a-Room Scheme. Above £7,500 you pay tax on the excess at your marginal rate.

£

Gross rent received in the tax year (incl. bills paid by lodger).

Taxable income

£1,500

After deducting the £7,500 Rent-a-Room allowance

Calculation

  • Gross rent
    £9,000
  • Rent-a-Room allowance
    −£7,500
  • Taxable
    £1,500

Add to your other income — taxed at your marginal rate. Declare via Self Assessment.

How we calculated your result

Compare gross rent received to the £7,500 allowance. If under, no tax to declare. If over, the excess is taxable income. Allowance halves to £3,750 if you split with someone else (couple, joint owners).

Official UK rules in simple English

  • £7,500/year tax-free (£3,750 if shared).
  • Lodger must live in your main residence — not a separate flat or BTL.
  • Furnished room only — bare rooms don’t count.
  • Lodger has ‘excluded occupier’ status — easy to remove with reasonable notice.

Common pitfalls to watch out for

  • ⚠ Bills included counts as rent

    If lodger pays £500/mo ‘all in’, the whole £6,000 counts — not just the rent slice.

  • ⚠ Capital gains hit if you rent the whole house

    Rent-a-Room only works while the property is your main home. Move out and let it, and you lose the allowance plus risk CGT on sale.

  • ⚠ Alternative scheme: actual expenses

    If rent is below £7,500, just elect into Rent-a-Room. Above, compare: actual rent − actual expenses might beat (rent − £7,500). Calculate both ways.

Frequently asked questions

Do I need to tell anyone?
Tell your mortgage lender, home insurer and (if leasehold) your freeholder. HMRC only if you go over the allowance.
Does Airbnb count?
Yes — if the property is your only/main home. Short-term lets count towards the £7,500 too.

HMRC rules apply. Speak to an accountant for complex cases (joint ownership, partial year).

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