Rent-a-room relief calculator, 2026/27
If you let a furnished room in your main home, this calculator compares the tax-free Rent-a-Room allowance against declaring actual rental profit, so you can choose whichever method leaves more in your pocket at year end.
The rent-a-room relief calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. Rent-a-Room allowance of £7,500 a year for 2026/27; the allowance halves if you share the income with a partner or joint owner. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under property & landlord. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last reviewed 12 September 2026 for the 2026/27 tax year. Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
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Result, 2026/27
Taxable rental profit
Rent-a-Room methodRent-a-Room allowance
Halved if you share the letting with someone elseProfit under the expenses method
Extra income tax on the letting
Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
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.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
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.
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