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Find out more'Will we be taxed for renting out our spare room?'
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Mike qualified as a financial adviser in 2002 and helps with guidance on tax, pensions and investments.
We bought a flat in August 2024 and started renting out our spare bedroom.
How do we declare the income and will we be taxed on it?
A Which? money member
'£7,500 is the magic number'
Mike Croxford, Which money expert, says:
You can take advantage of the rent-a-room scheme to reduce paperwork and any bills.
This allows individuals to earn up to £7,500 a year tax-free by renting a furnished room in their main home. It's automatically applied and you don't need to fill out a tax return if you earn less than that amount.
If this income is shared, for example with a joint owner – as in your case – the allowance is halved to £3,750 for each person.
Take advantage of the rent-a-room scheme to reduce paperwork and any bills
You haven’t generated £3,750 income in the tax year 2024-25 and so there is no need to do a tax return for that year. However, you told me that for the 2025-26 tax year you are likely to earn more than this amount.
You will need to register for self-assessment, but there is no need to do so until after 5 April 2026.
You can do this on the Government Gateway system. The deadline to register online is 5 October 2026.
You can submit your return at any time after the end of the tax year but the tax bill won’t be due until 31 January 2027, which is also the final submission deadline.
We would always recommend you submit as early as you can, as you’ll then know how much you will need to pay and can take steps to put this money aside.
- Find out more: Rent-a-room scheme: letting a room in your home
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