Rent a room relief

Rent a room relief is a statutory tax exemption set out in Part 7 of the Income Tax (Trading and Other Income) Act 2005, administered by HMRC under Helpsheet HS223, that allows a resident landlord to receive up to £7,500 of gross lodger income per tax year completely free of income tax. For the 2025/26 tax year (6 April 2025 to 5 April 2026) the threshold is £7,500. Where two people share the lodger income from the same property, for example, joint owners or a couple, the threshold is halved to £3,750 each. The relief applies to furnished accommodation in the landlord's only or main residence; it does not apply to self-contained lets, second properties, or buy-to-let investments.

Who qualifies

Three conditions must all be met.

First, the property must be the landlord's only or main residence at the time of the letting. An owner-occupier or a tenant (with permission to sublet) both qualify, provided they are living there while the lodger is in the room.

Second, the accommodation let must be furnished. An unfurnished room does not qualify.

Third, the accommodation must not be fully self-contained. A lodger who shares kitchen, bathroom, or living areas with the resident landlord falls within the scheme. A self-contained annex with its own kitchen and bathroom is almost certainly let as a private tenancy rather than a lodger arrangement and rent a room relief does not apply to it, see the August definition of annexes for the boundary test.

The relief applies to income from a resident landlord, a live-in landlord who occupies the property as their main home at the same time as the lodger, and does not apply to income from a separate private letting.

What counts as gross receipts

The £7,500 threshold is a gross figure applied to all payments received from the lodger, not just the headline rent. Utility contributions, meal charges, laundry, cleaning, and any other payments rolled into the lodger's weekly or monthly sum all count toward the threshold. If a lodger pays £550 per month in rent and £75 per month toward bills, the annual total is £7,500, exactly at the threshold.

Gross receipts does not mean profit. A landlord whose lodger income is £7,500 gross but whose attributable expenses total £3,000 has gross receipts of £7,500 for threshold purposes regardless of expenses, and is therefore at the threshold boundary rather than comfortably beneath it.

Automatic exemption below the threshold

If gross lodger receipts for the tax year are at or below the threshold, the exemption is automatic. No HMRC notification is needed and no tax is payable on that income. A landlord who does not otherwise complete a Self Assessment tax return has no obligation to file one solely because of qualifying lodger income below the limit.

The two options when income exceeds the threshold

When gross lodger receipts exceed £7,500 (or £3,750 for a joint claim), the landlord must complete a Self Assessment return and choose between two methods.

Method A (default): Tax is calculated on actual profit, total gross receipts minus allowable expenses such as a proportionate share of household bills, insurance, and wear and tear on furnishings. HMRC applies Method A automatically unless the landlord elects otherwise.

Method B (election): Tax is calculated on the amount by which gross receipts exceed the threshold. No expenses are deducted. The landlord pays tax on gross receipts minus £7,500. This is simpler but is only advantageous when actual expenses are low relative to income.

A landlord may switch between methods from one year to the next, but must notify HMRC within the time limit, generally by 31 January in the second year after the end of the relevant tax year. For the 2025/26 tax year, the deadline for notifying a Method B election or changing back to Method A is 31 January 2028.

For landlords with lodger income exceeding the threshold, August's expenses tracking and Making Tax Digital support simplify recording of gross receipts and any deductible costs needed to calculate tax under Method A.

What the relief does not change

Rent a room relief is a tax provision only. It does not affect housing law duties. A resident landlord taking in a lodger must still ensure the property is fit for human habitation, comply with fire safety and gas safety requirements, and avoid harassment or unlawful eviction, regardless of whether lodger income is below or above the threshold. The relief also does not affect council tax: taking in a lodger who is an adult may result in the loss of the 25% single person discount, depending on the lodger's circumstances.

The relief does not interact with the Renters' Rights Act 2025 in any direct way, genuine lodger arrangements under a licence to occupy, where the landlord shares the home, remain outside the mainstream private rented sector framework that the Act regulates.

For a full guide to taking in a lodger in 2026, including the legal relationship, safety obligations, lodger agreements, and the practical steps for a compliant arrangement, see the August lodger guide.

Frequently asked questions

What is the rent a room relief threshold for 2025/26?

The threshold for the 2025/26 tax year (6 April 2025 to 5 April 2026) is £7,500 gross per property. Where two or more people share the lodger income from the same property, the threshold for each person is £3,750.

Do you have to tell HMRC if lodger income is below £7,500?

No. If gross receipts are at or below the threshold, the exemption applies automatically and no HMRC notification is required, unless the landlord already completes a Self Assessment return for other reasons, in which case the rent a room claim is included there.

Does rent a room relief apply to Airbnb income?

It can, provided the host is living in the property as their main residence at the time of the let, the accommodation is furnished, and it is not a self-contained unit. Renting out a whole property while away does not qualify. If eligible, all payments received from guests, including service charges and bill contributions, count toward the £7,500 threshold.

Can rent a room relief be claimed alongside the property allowance?

No. The £1,000 property allowance and rent a room relief cannot both be applied to the same income. For lodger income in a main residence, rent a room relief at £7,500 is almost always more advantageous.