How does the Rent a Room scheme work?

How does the Rent a Room scheme work? Rent a Room lets you earn up to £7,500 a year tax-free in 2026-27 from furnished rooms in your own home, or £3,750 if someone else also receives income from letting in the same home. Usually not. GOV.UK says the exemption is automatic below your limit, so you do not need to do anything. You only need to act if you want to opt out, for example to claim a loss. Yes. The scheme applies to tenants as well as owners, as long as the room is in your only or main home. HMRC suggests checking your lease, your lender and your insurer, though these are not tax rules. Yes. Gross receipts include the rent plus anything the lodger pays for meals, cleaning, laundry, heating and similar goods or services. The limit is tested before any expenses. Read the full answer, with every source, at rightotax.co.uk.