Rent a room relief
If you rent out a room in your home, then the good news is that HMRC gives you up to £7,500 of income tax-free, under the appropriately named Rent a Room Scheme. Note that it's halved to £3,750 if someone else gets income from the property.
This includes if you're renting to a long-term lodger, via platforms such as Airbnb, or even if you're running a guest house.
To qualify you must be offering furnished accommodation in your main home. You don't need to own the property to qualify, but you'll normally need your landlord's permission to sub-let.
See HMRC's guidance for more information.
In MTD
If your income is below £7,500 (£3,750 if you share the income) from rooms rented in your home, you don't need to declare it at all, though you can choose to do so. If you exceed this level, you must include the rental income from rooms in your home.
To do this, you will need to set up two custom tags:
- One for your rent a room income
- One for your rent a room relief as an expense (you'll see it in the dropdown)
These need to be mapped to your property income source.
Tag all the income from your rent a room property with this tag (this includes income over the £7.5k level).
Create manual transactions for the rent a room relief at either £7.500, £3,750 if you share the income with someone else, or the total of your income from your rent a room property if less than the relevant threshold.
Not in MTD (legacy self assessment)
untied mobile app
You can indicate that you're renting out a room in your home by navigating to Profile > Income > Property. There’s an example from our mobile app below:
untied in the browser
In untied in your browser, you can indicate it via Tax forms > Property (which may be listed as SA105) > then tick the box and hit save:
