Taking in a lodger in 2026: Rent a Room tax rules | August

Taking in a lodger in 2026: the Rent a Room tax rules and checklist (UK)

A lodger is someone who rents a room in your home while you go on living there, sharing space such as the kitchen and bathroom with you. Because a lodger does not have exclusive possession of any part of the property, they are a licensee rather than a tenant, which makes the arrangement far more flexible than a normal letting and, thanks to the Rent a Room scheme, up to £7,500 a year tax-free. This guide explains what a lodger is, how Rent a Room relief works in the 2026 to 2027 tax year, your rights as a resident landlord after the Renters' Rights Act, the checks you must still carry out, and a practical checklist for before, during and after.

The legal framework below is for England. Scotland and Wales differ, and in Wales the Renting Homes (Wales) Act 2016 means a lodger can in some cases be a contract holder with more rights, so take local advice if your property is not in England. The Rent a Room tax relief applies across the UK.

What is a lodger?

A lodger rents a room in your home while you continue to live there, and that shared occupation is the crucial distinction. A tenant rents a self-contained property, or has exclusive possession of part of one, and is protected by the Housing Act 1988. A lodger shares living space with you, the resident landlord, typically with their own bedroom but shared use of the kitchen, bathroom and living areas, and so occupies under a licence rather than a tenancy agreement. You keep the right to enter all parts of your home, including the lodger's room, provided you give reasonable notice and respect their privacy.

That shared status is why a lodger has fewer statutory protections than a tenant on an assured shorthold tenancy. It is also why one point matters more than any other: you must keep living in the property throughout. If you move out permanently while the lodger stays, the arrangement can become a tenancy by conduct, and the lodger can acquire the security of tenure a tenant has, so the flexibility described here depends on the home remaining your main residence.

Can I rent out a room in my home?

Usually yes, but check your permissions first. If you own outright, you are free to take in a lodger, though it is sensible to tell your buildings insurance provider and to check HMO licensing if you plan to take in several lodgers. If you have a mortgage, check the lender's terms, because most residential mortgages allow one or two lodgers but taking in more, or running what looks like a business, may need consent or a switch to a buy-to-let mortgage; failing to tell the lender where required can breach the mortgage. If you rent your own home, you need written permission from your landlord before subletting to a lodger, as most tenancy agreements prohibit it and proceeding without consent can lead to eviction. If the property is leasehold, check the lease for restrictions on lodgers or subletting and, if in doubt, ask your managing agent or a solicitor.

The Rent a Room scheme: how it works in 2026

The Rent a Room scheme is one of the most generous reliefs in the tax system, and for the 2026 to 2027 tax year it lets you earn up to £7,500 tax-free from letting furnished accommodation in your main home, as HMRC sets out. The relief is automatic below the threshold. If your gross receipts from lodgers are £7,500 or less you do not need to tell HMRC, report it on a Self Assessment return, or pay any tax, though you should keep basic records, and if you already file a return for other reasons you may still need to note it.

One point the relief is widely misunderstood on is joint ownership. The £7,500 is not multiplied between owners. Where more than one person receives income from letting in the same home, for example a couple who jointly let the room, the allowance is halved to £3,750 each, so a couple sharing the income have £7,500 between them, not £15,000. If only one person receives the income, that person keeps the full £7,500. The relief applies only to your main residence, so it cannot be claimed on a second property or an investment property.

Working out tax once you pass £7,500

Above the threshold you choose between two methods each year, and you can switch to whichever is better. Under the relief method you pay tax only on gross receipts above £7,500, with no deduction for expenses. Under the normal method you declare the full rental income and deduct actual expenses such as utilities, repairs, insurance and a fair proportion of costs, paying tax on the profit. The relief method is simpler and usually better for a modest arrangement; the normal method can win where your costs are high, for instance if you provide meals or significant services. As a worked example, if a lodger pays you £10,000 a year and your costs are £5,000, the relief method taxes £2,500 (£10,000 less £7,500) while the normal method taxes £5,000 of profit, so here the relief method is better; reverse the numbers and the normal method wins, which is why it pays to run both.

If you do go over the threshold you must register for Self Assessment if you are not already in it, and the deadline to notify HMRC is 5 October after the end of the tax year in which you first exceeded £7,500. So if you pass £7,500 during 2026 to 2027, which runs from 6 April 2026 to 5 April 2027, you must notify HMRC by 5 October 2027.

What counts towards the limit

The £7,500 is measured on gross receipts, not profit, and it includes everything the lodger pays you: rent, contributions to utilities, and any charge for meals, laundry or cleaning. Meals are still within the scheme as long as the accommodation is furnished and in your home. Because the test is gross, a lodger paying £650 a month reaches £7,800 and tips you over the threshold even if your real profit after costs is small.

Your rights as a resident landlord

The relationship between a resident landlord and a lodger is different in kind from a landlord and tenant, and understanding the difference protects both sides.

Because a lodger shares your home and has no exclusive possession, they cannot hold an assured shorthold tenancy and are an excluded occupier under the Protection from Eviction Act 1977. This is the key 2026 point: the Renters' Rights Act, in force since 1 May 2026, which abolished Section 21 and moved tenants onto assured periodic tenancies, does not change lodger arrangements at all. You do not serve a Section 21 or Section 8 notice, and you keep the flexibility to end the agreement on reasonable notice. See our guide on your rights and responsibilities as a live-in landlord.

Ending the arrangement

A lodger can be asked to leave on reasonable notice without proving any grounds for possession. Most agreements set the notice period to match the rent period, commonly one month where rent is monthly, and where none is stated the courts treat reasonable notice as broadly the rent period. As an excluded occupier sharing with you, a lodger can be required to leave at the end of that notice without a court order, which is the main practical advantage over a tenancy. That is not a free hand, though. You cannot use force, change the locks without notice, or harass a lodger, and doing so can be a criminal offence, so give proper notice, communicate clearly and take advice if someone will not leave.

Deposits and Right to Rent

Two duties sit either side of the lodger relationship. Deposit protection does not apply: you are not required to place a lodger's deposit in a government scheme or serve prescribed information. Good practice still applies, so agree the amount in writing, record the room's condition with photographs or a check-in report, and return the deposit promptly less any fair deductions for damage beyond fair wear and tear. Right to Rent checks, by contrast, do apply and must be done before the lodger moves in. This is an England-only duty, and you must check original identity and immigration documents, take dated copies, and store them securely. The penalties were raised sharply in 2024: a breach can now cost up to £5,000 per lodger for a first offence, rising to £10,000 for repeat breaches, with criminal prosecution in the most serious cases. August's compliance checklist keeps the Right to Rent check and your other duties in one place with reminders.

Insurance

Taking in a lodger is usually a material change that your insurer needs to know about, and not telling them can invalidate cover. Notify your buildings insurance provider, since some include lodgers as standard while others add an endorsement or premium. Check your contents cover too: it typically protects only your possessions, not the lodger's, so advise the lodger to arrange their own contents insurance. Some insurers offer dedicated lodger policies covering public liability, accidental damage, loss of rent and legal expenses, which can be worth it if you depend on the income, and if you already hold landlord insurance it is worth asking the same provider about extending it.

The lodger agreement

A written agreement is not legally required, but it protects both sides by making expectations clear and giving you something to point to if a dispute arises. A good agreement records your name and the lodger's and confirms that you are the resident landlord sharing the home; the room they occupy and which areas are shared or out of bounds; the rent, when and how it is paid, and whether bills are included or split; the deposit amount and the basis for any deductions; the notice period, usually matching the rent period; and the house rules covering guests, noise, smoking, pets, cleaning and use of shared areas. Set the practical rules out plainly at the start, because that is what prevents friction later. Both of you should sign and date the agreement and keep a copy, and you can store yours securely alongside the deposit record, Right to Rent check and check-in photographs in August's document storage, accessible from your phone.

The practical checklist

Taking in a lodger is more than advertising a room and collecting rent, and a structured approach keeps you compliant and protects both sides.

Before you advertise, confirm in writing that your mortgage lender, your own landlord if you rent, and your insurer all permit a lodger, and check whether several lodgers would trigger HMO licensing with your council. Prepare the room to a good, clean, furnished standard, with a working smoke alarm and a carbon monoxide alarm fitted where there is a fixed combustion appliance under the carbon monoxide alarm rules. Research comparable rooms to set a fair rent, draft your agreement, and update your insurance.

While advertising and choosing, use reputable platforms and be honest about the room, the shared facilities and the house rules. Meet candidates in person, because you are inviting someone into your home, and ask for employment or previous-landlord references. Carry out the Right to Rent check on original documents before you agree to anything, and once you have chosen someone put all the terms in writing and have both parties sign before move-in.

When the lodger moves in, take the agreed deposit and give a receipt, photograph the room and shared areas to record their condition, hand over and log the keys, confirm how rent will be paid, and walk through the house rules and how shared facilities work. If you manage other properties, you can monitor lodger payments alongside the rest with rent tracking in August.

During the arrangement, keep communication open and deal with issues promptly, track rent and any repairs, give reasonable notice before entering the lodger's room except in an emergency, and if your lodger income passes £7,500 register for Self Assessment and keep records of income and expenses.

When the lodger leaves, take or give written notice in line with the agreement, inspect the room against the check-in photographs, and return the deposit promptly, ideally within ten days, less any fair deductions, with an itemised breakdown. Update your records and tell your insurer, your lender where required, and HMRC if your position has changed.

Tax beyond Rent a Room relief

For most homeowners with one or two lodgers the Rent a Room scheme is the whole tax story, but three wider points are worth knowing. First, the normal method can beat the relief where your costs are high, so run both as shown above before deciding. Second, on Making Tax Digital: since 6 April 2026, MTD for Income Tax applies to individuals whose combined self-employment and property income exceeds £50,000, and if you let other property as well as taking in a lodger your combined income could cross that line, in which case digital records make quarterly updates far simpler. Third, on Capital Gains Tax: taking in a single lodger while you live in the property does not normally affect the Private Residence Relief that keeps your main home free of CGT, though letting a substantial part of the home or running a lodging business can restrict it, so take advice before selling if that applies to you.

Frequently asked questions

Do I have to declare lodger income?

Not if your gross receipts are £7,500 or less and you are not otherwise in Self Assessment, because the relief is automatic. Once you pass £7,500 you must notify HMRC and file a return, registering for Self Assessment if you are not already in it, by 5 October after the end of that tax year.

How much can I earn from a lodger tax-free?

Up to £7,500 a year from furnished accommodation in your main home. If two people receive the income from the same property, the allowance is halved to £3,750 each, so a couple have £7,500 between them rather than £15,000. The limit is measured on gross receipts, including any charges for bills, meals or cleaning.

Can I evict a lodger without a court order?

In England, yes. A lodger who shares your home is an excluded occupier, so once you have given the notice in your agreement, or reasonable notice matching the rent period, you can require them to leave without a possession order. You still cannot use force or harassment, which can be criminal. Wales and Scotland differ.

Does the Renters' Rights Act apply to lodgers?

No. The Act, in force since 1 May 2026, changed the rules for tenants on assured tenancies, including abolishing Section 21. A lodger sharing your home is a licensee, not an assured tenant, so the Act does not change the arrangement, provided you keep living in the property as your main home.

Do I need my mortgage lender's permission to take in a lodger?

Often yes. Most residential mortgages allow one or two lodgers, but check the terms, because more lodgers or a business-like arrangement can need consent or a buy-to-let mortgage, and not telling the lender where required can breach the mortgage. If you rent your own home, you need written permission from your landlord first.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.