Rent a Room Relief Calculator

This rent a room relief calculator shows UK homeowners and tenants who take in a lodger how much Income Tax they will pay on that income in the 2026/27 tax year, comparing the £7,500 Rent a Room Scheme with claiming actual expenses. It works out your tax band from your other income, applies the £3,750 limit when the income is shared and tells you which method to choose and by when. Figures checked October 2026.

Quick answer: You can earn £7,500 a year tax free from a lodger in your main home, or £3,750 each if the income is shared. Above that you pay tax either on receipts minus £7,500 or on receipts minus actual expenses. In this rent a room relief calculator, £9,600 at basic rate costs £420.

What Is Rent a Room Relief?

Rent a room relief is an HMRC scheme that lets you receive up to £7,500 a year tax free for letting furnished accommodation in your only or main home, whether you own it or rent it. The limit halves to £3,750 for each person if someone else, such as a joint owner, also receives income from letting in the same property.

The formula in plain words: add up everything the lodger pays you, including charges for meals, cleaning or laundry. If that total is £7,500 or less, the relief is automatic. If it is more, you choose between Method A, where you pay tax on receipts minus actual expenses, and Method B, where you pay tax on receipts minus £7,500 and claim no expenses at all. The tax is then charged at your normal Income Tax rate, which depends on your other income.

How to Use the Rent a Room Relief Calculator

Step 1: Enter What Your Lodger Paid

Add up the rent for the tax year from 6 April 2026 to 5 April 2027, plus anything extra you charge for food, cleaning, laundry or a share of bills. HMRC counts all of these as gross receipts, so leaving out the bills element is a common reason people go over the limit without realising.

Step 2: Enter Your Expenses

Enter the costs of the letting: the lodger's fair share of gas, electricity, broadband and water, extra insurance, repairs to the room and replacement of furniture you provide. You only need these figures to test Method A, because Method B ignores expenses completely.

Step 3: Choose the Limit and Add Other Income

Choose £3,750 if a partner or joint owner also receives part of the rent. Then enter your salary, pension or self employed profit for the year, because that decides whether the lodger income is taxed at 20%, 40% or more. The self employed tax calculator gives your trading profit if you need that figure first.

Step 4: Read Your Result

The headline shows the tax under the better method. The stats give the tax under each method, the saving and your top rate, and the box tells you what to do next, including the deadline to elect into or out of the scheme.

How Much Can You Earn Tax Free Renting a Room?

You can earn up to £7,500 a year tax free, which is £625 a month, from a lodger in your own home. If you share the income with a joint owner, each of you has £3,750. The limit has been £7,500 since April 2016 and stays the same for 2026/27.

Worked example: Priya, a nurse in Bristol earning £35,000, lets her spare room to a student for £800 a month including bills, so she receives £9,600 in 2026/27. Her expenses for the letting come to £1,800. Under Method A her profit is £9,600 minus £1,800, which is £7,800, and tax at 20% is £1,560. Under Method B she is taxed on £9,600 minus £7,500, which is £2,100, so tax is £420. Method B saves her £1,140, and she must elect for it on her tax return.

Receipts	Expenses	Method A taxable	Method B taxable	Better method (basic rate tax)
£6,000	£900	£5,100	£0 (automatic)	Scheme, £0
£9,600	£1,800	£7,800	£2,100	Scheme, £420
£9,000	£8,000	£1,000	£1,500	Expenses, £200
£4,800 each, shared	£900 each	£3,900	£1,050	Scheme, £210 each

Is the Rent a Room Scheme or Claiming Expenses Better?

The scheme is better whenever your expenses are below £7,500, or £3,750 if shared, which is true for almost every lodger arrangement. Claiming actual expenses only wins when your costs are higher than the limit, or when expenses exceed your receipts and you want to record a loss to carry forward.

You cannot combine the two, and you cannot use the £1,000 property allowance on the same lodger income either. The GOV.UK guidance on tax free allowances on property and trading income says the property allowance is not available for income from a room in your own home, so the rent a room relief calculator only compares the two methods that apply.

Do I Need to Tell HMRC About a Lodger?

Not if your receipts are £7,500 or less: the exemption is automatic and you do nothing. If you receive more, you must complete a Self Assessment tax return and can then opt into the scheme. The official GOV.UK Rent a Room page confirms the scheme covers furnished accommodation in your home but not a home converted into separate flats, so a self contained annexe needs checking.

Your choice of method must be made within one year of 31 January following the end of the tax year. For 2026/27, which ends on 5 April 2027, that deadline is 31 January 2029. The same deadline applies if you want to opt out of the automatic relief to claim a loss. Once made, an election to use Method B carries on until you withdraw it or your receipts drop below the limit.

What Changes for Rental Income From April 2027?

From the 2027/28 tax year, property income will have its own rates of 22%, 42% and 47%, two points above the normal rates. The £7,500 Rent a Room limit is not changing, so lodger income inside the limit stays tax free, but any taxable excess will cost more from 6 April 2027. If you also receive dividends, the dividend tax calculator shows how that income stacks on top of your salary and lodger profit for the same tax year.

Frequently Asked Questions