Property
Rent-a-Room — Tax-Free £7,500
Dan has a spare bedroom in his London flat. He lists it on SpareRoom and finds a lodger who pays £600/month. That's £7,200/year. Under the Rent-a-Room scheme, the first £7,500 of income from renting a furnished room in your home is completely tax-free. Dan pays zero tax. He doesn't even need to report it to HMRC.
The room must be furnished and in your main home. It works for homeowners and renters (with landlord permission). It also covers B&B-style hosting. If you share the income with someone else, the threshold halves to £3,750 each.
£7,500tax-free per year
Annual Rent-a-Room threshold
CapyPay Top Tips
- If income exceeds £7,500, you can choose between the Rent-a-Room allowance (no expenses but £7,500 free) or normal rental accounting (claim expenses but no allowance). Pick whichever gives less tax
- This works alongside Airbnb — short-stay hosting from your spare room counts
- If you're a renter, check your tenancy agreement and get landlord permission first
- Council tax and mortgage terms are not affected in most cases, but verify with your provider
- SpareRoom, OpenRent, and Airbnb are the main platforms. SpareRoom is best for long-term lodgers
→ Action: List your spare room. If income stays under £7,500, it's all yours.