Navigating UK tax when renting out a room in your home can be challenging, especially with changing tax rates, National Insurance rules, and filing deadlines. The UK rent a room relief rules aim to simplify the reporting requirements and provide generous reliefs for individuals letting rooms within their main property. In this complete guide, we explain everything you need to know about UK rent a room relief — from how the relief applies and the reporting requirements.
Who Should Read This?
This article is relevant for UK tax resident individuals who receive income from renting a portion of the residence they live in and are therefore likely eligible for UK rent a room relief. For example, renting out a room or annex of your house.
Details on letting a UK property while non-resident and letting a separate rental property can be found in our other articles.
If you are unsure about your UK tax residence status, please contact us via Contact Expat Tax Solutions UK to discuss your UK tax residence position.
What Income Is Eligible For UK Rent A Room Relief?
Understanding what types of income qualify for UK rent a room relief is key to managing your UK tax affairs and reporting requirements.
Rental income for UK rent a room relief purposes is any income earned through the letting of the property that you live in. This includes the rents paid by tenants and also any payments the tenants make to you for things such as the use of furniture, utilities, cleaning and ground rent etc. If the tenants contract and pay directly for their own utilities, this is not rental income and does not need to be considered further.
The tenants may have also paid an initial deposit when starting the tenancy. This is not rental income and is not subject to tax.
How Much Is UK Rent A Room Relief?
UK rent a room relief is a tax free deduction of £7,500 per year per property.
Therefore, when renting out a room in your residence, you have two options to calculate the UK taxable profit:
- Deduct the actual costs of the rental business expenses incurred; or
- Deduct the Rent A Room allowance of £7,500.
You are able to choose the most beneficial of the two options above for each tax year you let a property however you cannot deduct the UK rent a room relief and your actual expenses.
Given the high value of UK rent a room relief, the majority of landlords in this position will claim rent a room relief.
The £7,500 UK rent a room relief deduction applies once per property per year. Therefore, if you own the property jointly, the relief is split between owners. If you have multiple tenants then all rents collected should be combined before deducting the £7,500 relief.
Separate rules apply if you let a property you do not live in or have converted the property into separate flats so please read our separate article if this applies to you.
Mortgage Interest Tax Relief When Claiming UK Rent A Room Relief
Interest payments for financing costs related to the property (mortgages etc.) are eligible for UK tax relief however they cannot be claimed if you are also claiming UK rent a room relief.
For more details regarding claiming actual expenses and mortgage relief, please read our article regarding UK tax on rental income.
How UK Tax on Rental Income Is Calculated When Claiming UK Rent A Room Relief
Should you have any residual UK taxable profit after the UK rent a room relief deduction of £7,500 is claimed, the UK tax due is based on your total taxable income and applicable tax bands. The UK tax on rental income is calculated using the ‘non-savings’ rates which are the same rates as those applied to employment income. The 2025/26 rates are:
| Band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
The above thresholds apply to your total taxable income and therefore, if you also have other sources of UK taxable income (self-employment income, bank interest, dividends etc.) or are also employed, your rental income is taxed at the highest rate that the income falls into.
For example, if you earn a salary of £30,000 and receive rental income from a room in your property of £10,000. You can claim UK rent a room relief of £7,500 resulting in £2,500 of taxable rental profit. This £2,500 sits wholly in the basic rate band and the tax due on that income is £500 (£2,500 x 20%).
*If your UK taxable income exceeds £100,000, you will start to lose entitlement to the personal allowance. The rates shown are for English and Welsh taxpayers. Individuals living in Scotland are subject to different rates of tax.
Do I Pay National Insurance on Rental Income in 2025?
No. Rental income is not currently subject to National Insurance even if it exceeds the UK rent a room relief deduction.
Student Loan Repayments on Rental Income
Student Loan repayments are calculated based on your UK taxable income and plan type. UK taxable income in excess of the repayment threshold for your plan is subject to Student Loan repayments at the rate specified in your plan (9% for an Undergraduate Degree or 6% for Postgraduate Student Loans).
Rental income is classed as ‘unearned income’ and is only considered for Student Loan repayments if your total ‘unearned income’ for the year exceeds £2,000.
Therefore, if your taxable rental profit exceeds £2,000 and your total taxable income exceeds the repayment threshold, your rental profit will be subject to Student Loan repayments via your self-assessment tax return.
VAT Rules for UK Tax on Rental Income
Rental income is not subject to VAT and you therefore do not need to register for VAT.
Record Keeping When Claiming UK Rent A Room Relief
You must keep records of your rental income and expenses for UK tax purposes. You do not need to submit the records to HMRC however they must be retained to calculate the UK tax on your rental income. In the event of a HMRC enquiry, HMRC will request copies of these records to validate your rental income and justify any UK tax fee deductions that have been claimed.
You must keep your records for 5 years after 31 January following the end of the tax year. I.e. for the 2025/26 UK tax year, records must be kept until 31 January 2032.
Claiming UK Rent A Room Relief: Deadlines and Filing Rules
If your rental income is less than the Rent A Room relief of £7,500 (or your share for jointly owned properties), the relief applies automatically and you are not subject to tax/NIC nor are you required to declare your income to HMRC.
If your rental income is more than the Rent A Room relief, you are required to declare this to HMRC via a self-assessment tax return. You must first register for self-assessment via Check how to register for Self Assessment – GOV.UK.
The deadline to register for self-assessment is 5 October following the end of the tax year. i.e. for 2025/26 UK tax returns, you must register by 5 October 2026.
Once registered, HMRC will issue you with a Unique Taxpayer Reference (UTR) which is a 10 digit identification number necessary to file your tax return.
The deadline to file your tax return and pay any outstanding liabilities is 31 January following the end of the tax year. i.e. the 2025/26 UK tax return filing and payment deadline is 31 January 2027.
HMRC will levy interest and penalties if your tax return and payments are not made by this date.
For help in determining whether you have a tax return filing obligation and support with preparation and submission of your tax return, please contact us to schedule a free no obligation consultation via: Contact Expat Tax Solutions UK
UK Rent A Room Relief FAQs
Do I have to pay tax when claiming UK rent a room relief?
UK rental income is taxable however, if your rental income is less than £7,500 and you are eligible for UK rent a room relief, you do not need to declare or pay tax on it.
How much UK tax on rental income do I pay?
UK tax on rental income exceeding the UK rent a room deduction of £7,500 is calculated at your marginal tax rate. Therefore 20%, 40% and 45% rates will apply depending on your total UK taxable income during the year.
How do I claim UK rent a room relief?
UK rent a room relief automatically applies if your rental income is less than £7,500 otherwise it is claimed through a self-assessment tax return. The deadline to file your return and pay the relevant tax is 31 January following the end of the tax year. I.e. the deadline for the 2025/26 tax year is 31 January 2027.
What are the penalties if I don't declare my rental income?
If a tax return is filed late, a £100 late filing penalty applies. Penalties are levied while the return remains outstanding with up to £1,600 of penalties applying to tax returns that are one year late. In addition, late payment penalties and interest apply relating to unpaid tax. HMRC may also levy further penalties if they believe tax returns were deliberately not filed.
Get Expert Help With UK Rent A Room Relief
If you want to ensure that you are eligible for UK Rent A Room Relief, our experts can help. Schedule a free no-obligation consultation to receive expert advice from a Chartered Tax Advisor.