Rent a Room Tax Calculator 2026/27: Your £7,500 Tax-Free Threshold
Last updated 24 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
The Rent a Room scheme lets you earn up to £7,500 a year tax-free from letting furnished rooms in your own home (£3,750 each if two people share the income). Earn more and you choose the better of two methods. The calculator above does the comparison for 2026/27.
Taking in a lodger is one of the most tax-efficient ways to earn extra income in the UK. The Rent a Room scheme gives you a generous £7,500 tax-free threshold — far higher than the £1,000 property allowance — as long as you’re letting furnished accommodation in the home you live in.
The calculator above tells you instantly whether you’re within the threshold and, if not, which calculation method leaves you better off. This guide covers the rules, the £3,750 split, and the trap of opting in by mistake.
If you let a separate property rather than a room in your home, the property allowance or normal rules apply instead.
Free calculator · no sign-up
Rent a Room Tax Calculator 2026/27
Check your lodger income against the £7,500 threshold and see whether Method A or B leaves you with less tax.
Result
- Rent a Room tax-free allowance
- £7,500
- Income above the allowance
- £1,500
- Potentially taxable amount
- £1,500
Threshold £7,500 (£3,750 if shared). Gross figure includes charges for meals and services.
What qualifies — and the £7,500 threshold
Rent a Room applies to furnished accommodation in your only or main home. That includes a lodger in a spare room, or running a small bed-and-breakfast or guest house from where you live. It does not apply to a separate buy-to-let, or to rooms let as an office or unfurnished.
The tax-free threshold is £7,500 per year. If two or more people receive the income (for example a couple who jointly let), each person’s threshold is halved to £3,750.
| Situation | Tax-free threshold |
|---|---|
| One person receives the income | £7,500 |
| Two people share the income (e.g. couple) | £3,750 each |
| Letting a separate property | Not eligible — use normal rules |
The £7,500 is gross — it counts rent plus any charges for meals, cleaning or laundry. Add everything the lodger pays you before comparing to the threshold.
What happens when you earn over £7,500
Go over the threshold and you must tell HMRC, but you get to choose the cheaper of two methods each year:
- Method A (do nothing special): pay tax on your actual profit — total receipts minus actual expenses — ignoring the scheme
- Method B (claim the scheme): pay tax on your gross receipts minus the £7,500 (or £3,750), with no expense deductions
Method B usually wins when your expenses are low. Method A wins when your costs are high. You must actively elect for Method B — and the election generally must be made within the time limit, so don’t leave it to chance.
How to use the Rent a Room calculator above
Common Rent a Room mistakes
The scheme is simple but a few errors cost people money or cause compliance problems.
- Forgetting that charges for meals and services count toward the £7,500
- Not realising the threshold halves to £3,750 when a partner also receives the income
- Letting an unfurnished room or a room in a property you don’t live in — neither qualifies
- Staying on Method B automatically when high expenses mean Method A would be cheaper
You can’t use Rent a Room and the £1,000 property allowance on the same income. Pick the relief that fits — Rent a Room is far more generous for live-in lodgers.
Make the most of your lodger income
LandlordTaxAi checks your Rent a Room position automatically, compares Method A and B each year, and keeps you compliant if you go over £7,500 — all from your bank feed.
See how it worksA worked example
Nadia lets a furnished room to a lodger for £600 a month (£7,200) plus £600 a year for meals. She’s the only recipient and has £400 of expenses (2026/27).
| Total receipts (£7,200 + £600) | £7,800 |
| Rent a Room threshold (solo) | £7,500 |
| Method B taxable (£7,800 − £7,500) | £300 |
| Method A taxable (£7,800 − £400 expenses) | £7,400 |
| Better method | Method B — tax on just £300 |
Even slightly over the threshold, Method B taxes Nadia on only £300 versus £7,400 the normal way — the scheme is hugely valuable for live-in landlords.
Frequently asked questions
How much can I earn tax-free from a lodger?
Up to £7,500 a year under the Rent a Room scheme (£3,750 if someone else also receives the income), for furnished rooms in your own home.
Do meals and bills count toward the £7,500?
Yes. The threshold is gross, so any charges for meals, cleaning, laundry or bills are added to the rent before comparing to £7,500.
What if I earn more than £7,500?
You choose the cheaper method: pay tax on your actual profit (Method A), or on receipts minus £7,500 with no expenses (Method B). Method B usually wins when costs are low.
Does Rent a Room apply to a buy-to-let?
No. It only applies to furnished accommodation in your main home. A separate rental property uses normal rules or the £1,000 property allowance.
Can a couple each claim £7,500?
No. If two people receive the income, the threshold is halved to £3,750 each, not £7,500 each.
Do I need to tell HMRC if I’m under the threshold?
Generally no — income within the threshold is exempt and need not be reported, unless you already file a Self Assessment return for other reasons.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme; https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2025; https://www.litrg.org.uk/savings-property/property-income/rent-room. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.