Taking in a lodger: which way pays least tax?
Rent a Room lets you earn £7,500 a year tax-free from a lodger. If your costs are high, the normal way can still be cheaper.
Your answer
Enter the rent and your salary to compare the two ways.
About this calculator
For homeowners and tenants letting a furnished room in the home they live in. It doesn't cover letting a whole property or a separate flat.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Under Rent a Room, the first £7,500 of rent a year is tax-free (£3,750 each if you share it), but you can't take off costs. The normal way, you pay tax on the rent less your costs. We work out the tax both ways, on top of your salary.
Worked example
Rent a Room is cheaper: £420 tax, £1,766 less than the other way.
2026/27 tax year · tax-free amount £7,500 · salary £45,000
| Rent you receive a year | £9,600 |
|---|---|
| Rent a Room: taxed on rent above the tax-free amount | £2,100 |
| Rent a Room: tax | £420 |
| Normal way: taxed on rent less your costs | £8,100 |
| Normal way: tax | £2,186 |
Worked out using HMRC's published rates for the 2026/27 tax year (6 April 2026 to 5 April 2027).
Questions people ask
Can I use the £1,000 property allowance instead?
Not for a room in your own home. HMRC doesn't allow the property allowance on that income.
Do I need to tell HMRC?
Not if your rent is under the tax-free amount and you're using Rent a Room. If it's over, you'll need to fill in a tax return.
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