Rent-a-room relief calculator, 2026/27

How this is calculated

Rent-a-Room relief lets you receive up to £7,500 a year tax-free from letting furnished accommodation in your main home, without submitting any figures at all if gross receipts stay under the limit. Above the limit, you choose between two methods: pay tax on receipts over £7,500 with no deduction for expenses, or opt out and pay tax on actual profit, gross rent less genuine running costs.

This calculator compares both outcomes and shows whichever taxable figure is lower, since HMRC lets you elect for whichever method suits you each year rather than being locked into one. The election for the alternative method must be made on your Self Assessment return by the filing deadline.

Where expenses are low, for example because you already pay all your household bills, the flat Rent-a-Room limit usually wins. Where you have significant costs directly attributable to the lodger, such as a large increase in utility bills or a service you provide, the profit method can produce a lower taxable figure.

When Rent-a-Room does not apply

The relief only covers letting part of your only or main residence while you live there too; a separate self-contained annexe let out while you live in the main house does not always qualify, and lets of an entire property you do not live in never qualify.

If you and a partner both receive the rent, each of you can only claim half the annual limit, not the full amount each, which often makes the actual profit method more attractive for jointly-let rooms.

Reporting the income

If gross receipts exceed the Rent-a-Room limit, or you would rather use the expenses method, the letting must be reported on the property pages of your Self Assessment return, alongside any other rental income you have.

Landlords letting a room while also letting a separate investment property need to keep the two income streams clearly separate, since only the room in your own home benefits from Rent-a-Room relief.

How much can I earn tax-free from a lodger in 2026/27?

Up to £7,500 in gross rent a year is completely tax-free under Rent-a-Room relief, with no need to file if that is your only untaxed income and receipts stay under the limit.

Do I have to choose Rent-a-Room relief or can I deduct expenses instead?

You can elect each tax year for whichever method gives the better result: the flat allowance with no expense deduction, or actual profit after genuine running costs. The election is made through your Self Assessment return.

Does Rent-a-Room relief apply to a separate rental property?

No. It only applies to furnished accommodation in the home you live in as your main residence. A wholly separate investment property must be taxed under the normal property income rules.

What happens if two joint owners take in a lodger together?

The £7,500 Rent-a-Room limit is halved between joint recipients of the income, so each of you gets up to £3,750 tax-free rather than the full amount each.