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Glossary · Tax

Rent a Room Scheme

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By the Money Guide editorial team · Editorial responsibility: Kaiser Khan, Editorial Director · How we check facts

Definition: Lets you earn up to £7,500 a year tax-free from letting furnished accommodation in the home you live in.

The £7,500 threshold halves to £3,750 if shared with another joint owner. The allowance applies automatically below the threshold; above it, you choose between paying tax on receipts minus £7,500 or treating the activity as a normal rental business.

Primary source: gov.uk/rent-room-in-your-home

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