Rent a Room scheme and taking in a lodger

Rent a Room relief applies across the UK. Housing, safety and short-stay rules apply to England unless a nation is named.

Tax on lodger rent

Rent a Room relief exempts income from letting furnished accommodation in your only or main home, up to a yearly limit. The lower limit applies if someone else, such as a joint owner, also receives income from letting accommodation in your home.

If your receipts go over the limit

You must complete a Self Assessment tax return. If you have not filed one before, register for Self Assessment first. Work out both methods each year, because the cheaper one depends on your expenses.

You can opt out of the relief even when your receipts are under the limit. Do this if you made a loss and want to carry it forward against future rental profit. You cannot create a loss when your receipts are exempt or when you use Method B.

You cannot use the property allowance on Rent a Room income.

Lodger or tenant

The tax relief is the same for a lodger or a tenant. The difference lies in how you end the letting. A genuine lodger is not an assured tenant. The Housing Act 1988 excludes lettings by a landlord who lives in the same building, and the Renters’ Rights Act 2025 did not change that.

What matters is whether the lodger shares living space with you. A lodger who shares accommodation with you, such as a kitchen, bathroom or living room, is an excluded occupier. Stairs, corridors and storage do not count as shared accommodation. Your home must be your only or main home. A lodger with their own self-contained space has basic protection.

A tenant in a self-contained home in a separate building from yours is not a lodger. Their tenancy is likely to be an assured tenancy, so the Renters’ Rights Act rules for landlords apply.

Gas, alarms, shared houses and right to rent

You are responsible for keeping the property safe and in good repair. In England and Wales, gas safety rules apply to a room you let to a lodger.

The smoke and carbon monoxide alarm regulations in England do not cover a lodger who shares accommodation with you. Fit working smoke and carbon monoxide alarms anyway.

A house in multiple occupation (HMO) with five or more occupiers from more than one household needs a licence from your council. Some councils also license smaller HMOs.

In England, you must check that a lodger has the right to rent before they move in.

Mortgage, lease and insurance

Letting a room can breach the terms of a mortgage, a lease, a tenancy agreement or a home insurance policy. Read each one before you take a lodger. Get written permission where it is required. If you rent your home, check your tenancy agreement before you let a room to anyone.

Bills, deposits and other taxes

You stay responsible for Council Tax. Tell your council if a lodger ends your single person discount. If you charge for gas and electricity, charge no more than you paid plus VAT, or you could face civil proceedings.

As a resident landlord you do not have to protect a lodger’s deposit in a government-approved scheme. A lodger who shares living space with you does not count as letting out your home for Capital Gains Tax.

Airbnb and other short stays

Rent a Room applies to a furnished room in your only or main home however short the stay and whichever platform you use. Platforms such as Airbnb may report your details to HMRC. Count your income for the tax year from 6 April to 5 April, not the calendar year some platforms show.

A guest booked for a holiday only is not a lodger. They are an excluded occupier under the Protection from Eviction Act 1977.

Where to get help

Ask HMRC if you are unsure whether Rent a Room applies to you or which method to use. Ask your council’s housing team about HMO licensing, short-stay rules and ending a letting.