£5,000 Rental Income — Rent a Room 2025-26
£30,000 salary. Comparison: Rent a Room Scheme vs standard deductions.
Rental income
£5,000
Tax (scheme)
£0
Rent a Room Scheme
Tax (standard)
£800
Standard deductions
Recommended
Rent a Room Scheme
Saves £800 vs standard
Scheme vs standard deductions comparison
| Rent a Room Scheme | Standard rules (20% expenses) | |
|---|---|---|
| Gross rental income | £5,000 | £5,000 |
| Deduction | - £7,500 (RARS threshold) | - £1,000 (20% expenses) |
| Taxable amount | £0 | £4,000 |
| Tax at 20% (basic rate) | £0 | £800 |
| Tax at 40% (higher rate) | £0 | £1,600 |
| Net income (basic rate taxpayer) | £5,000 | £4,200 |
* Standard rules comparison assumes 20% allowable expenses. Actual expenses may vary.
Frequently asked questions
How much tax do I pay on £5,000 rental income?
Under the Rent a Room Scheme, no tax is due on £5,000 of rental income — the full amount falls within the £7,500 annual threshold. No Self Assessment return is required unless HMRC asks.
Should I use the Rent a Room Scheme or standard deductions?
For £5,000 rental income on a £30,000 salary, the Rent a Room Scheme is better — it saves £800 compared to standard deductions (assuming 20% allowable expenses). If your actual expenses are very high, recalculate with your real costs.
Do I need to complete Self Assessment?
No Self Assessment return is required if you use the Rent a Room Scheme and your income is £7,500 or under. The income is automatically exempt.