Landlords & live-in lodgers
Rent a Room Scheme calculator
Letting a spare room to a lodger? The Rent a Room Scheme lets you earn up to £7,500 a year tax-free from furnished accommodation in your own home. But once you're over that threshold you have a choice — use the scheme's flat allowance, or be taxed the normal way on your profit. This works out which leaves you paying less tax for 2026/27. Nothing is sent anywhere; it all runs in your browser.
Your lodger income
Enter the rent you receive over the year, any expenses you could claim under the normal method, and your other income so we can apply the right tax rate. Rough figures are fine.
How the scheme works
- Up to £7,500 is tax-free. If you let furnished rooms in the home you live in and your gross receipts for the year are £7,500 or less, the income is exempt automatically — you don't even have to tell HMRC. The allowance is halved to £3,750 if someone else (a partner or joint owner) shares the income.
- Over the threshold, you choose. If you receive more than £7,500 you can either be taxed the normal way — profit is rent minus allowable expenses — or opt into the scheme and pay tax only on the amount above £7,500, with no expense deduction. You pick whichever costs less.
- It's taxed at your marginal rate. Rent a Room income sits on top of your other income, so it's taxed at 20%, 40% or 45% depending on what you already earn. There's no National Insurance on it.
The scheme isn't always the winner
If your expenses are high — say you've furnished the room or bills are steep — the normal method can leave less profit to tax than the flat £7,500 deduction removes. That's why the calculator works out both and tells you which to use. You can switch year to year on your tax return.
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Common questions
How much can I earn from a lodger tax-free in 2026/27?
Up to £7,500 a year under the Rent a Room Scheme, as long as you let furnished accommodation in the home you live in. If you share the income with someone else — a partner or joint owner — the tax-free threshold is halved to £3,750 each. Below the threshold the exemption is automatic and you don't need to tell HMRC.
Do I pay tax if I earn more than £7,500 from my lodger?
Only on the amount above the threshold, and only if that works out cheaper than the normal method. Under the scheme you're taxed on your gross receipts minus £7,500, with no deduction for expenses. Alternatively you can be taxed the normal way — rent minus allowable expenses — and use whichever leaves you paying less. This calculator compares both for you.
Is the Rent a Room Scheme always the best option?
No. It's best when your expenses are low, because the flat £7,500 allowance is usually bigger than the expenses you could otherwise claim. But if you've spent a lot — furnishing the room, a large share of bills — the normal method can tax a smaller profit. Enter your expenses above and the calculator shows the tax under each method side by side.
Does the room income affect my tax rate?
Yes. Rent a Room income is added on top of your other income, so it's taxed at your marginal rate — 20% for a basic-rate taxpayer, 40% at higher rate and 45% above £125,140. Entering your other income lets the calculator apply the correct rate, including the point where extra income tips you into a higher band.
Do I have to fill in a tax return for lodger income?
If your receipts are within the tax-free threshold, no. If they're over it you must complete a Self Assessment return, report the income and either opt into the scheme or claim your expenses. If you also have self-employment or other rental income, our Rental ROI Calculator and Tax Estimator help you pull the whole picture together.
Can I use the scheme if I rent out an unfurnished room or a whole property?
No. The Rent a Room Scheme only covers furnished accommodation in your own home while you live there. Letting an unfurnished room, a self-contained flat, or a property you don't live in is ordinary property income — use our landlord tax calculator for that instead.
Letting more than a spare room?
The Rent a Room Scheme is for a lodger in your own home. The moment you have a buy-to-let — or a second property you let out — it's ordinary property income: Section 24 mortgage interest rules, allowable expenses, and a Self Assessment return every January. The paid Rental Property ROI & Yield Calculator analyses a deal end to end and shows the real, after-tax return, so you know a property makes money before you buy it.
- Rental Property ROI & Yield Calculator — gross and net yield, monthly cash flow and the Section 24 tax hit, on one screen.
- Self Assessment Tax Estimator 2026/27 — your whole bill, rental profit plus any other income, with the amount to set aside.
- Freelance Day-Rate & Profit Calculator — for the self-employed side of the picture.
- Invoice Tracker & Log — paid, outstanding and overdue, automatically.
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Get the Rental ROI Calculator — £9 →£9 on its own, or all four tools for £19, with a 14-day money-back guarantee.