Rent-a-Room Scheme Calculator UK 2025/26
Find out how much of your lodger or Airbnb income is tax-free under the £7,500 Rent-a-Room allowance — and how much you owe if you go over it.
What Is the Rent-a-Room Scheme?
The Rent-a-Room scheme is a government incentive that allows homeowners and tenants (with landlord permission) to earn up to £7,500 per tax year tax-free from letting furnished accommodation in their main home. The scheme applies whether you let a room to a long-term lodger or use a short-let platform such as Airbnb.
The exemption applies automatically if your gross rental income is below the threshold — you do not need to do anything or contact HMRC. If your income exceeds the threshold, you must register for Self Assessment and declare the excess.
How the £7,500 Threshold Works
| Situation | Rent-a-Room Threshold 2025/26 |
|---|---|
| Sole owner / sole occupier earning rental income | £7,500 |
| Jointly owned property (split between two people) | £3,750 each |
The threshold applies to gross income — the total amount received before any expenses are deducted. If your income is above the threshold, you have two options for calculating the tax you owe.
Option 1 — The Rent-a-Room Basis (Default)
Under the Rent-a-Room basis, you pay tax only on the amount by which your gross income exceeds the £7,500 threshold (or £3,750 if jointly owned). You cannot deduct any expenses under this method. Tax is charged at your marginal rate — 20% for basic rate taxpayers, 40% for higher rate, and 45% for additional rate taxpayers.
Option 2 — Actual Profit Basis
Alternatively, you can opt out of the Rent-a-Room scheme and pay tax on your actual profit — total income minus actual allowable expenses. This is worth considering if your expenses are high relative to your income, or if you made a loss and want to offset it against other income. You elect the alternative basis by completing a Self Assessment return.
Which Method Is Better?
For most landlords letting a simple furnished room, the Rent-a-Room basis is simpler and usually more tax-efficient. The actual profit basis becomes advantageous only when your allowable expenses — maintenance, utilities, insurance allocated to the rental space — exceed the £7,500 exemption amount.
Rules and Eligibility
To qualify for the Rent-a-Room scheme the room must be furnished, in your main home, and you must be living in the property at the same time as your lodger or guest. The scheme does not apply to rooms in a property you own but do not live in, to commercial lets, or to self-contained flats within the building.
You do not need to own the property — tenants can use the scheme with their landlord’s permission.