Last Updated on May 22, 2025
Each year, many UK homeowners earn extra income by renting out a room in their property.
To support this, the UK government offers a valuable tax relief known as the Rent a Room Scheme.
But what happens if you’re a non-resident property owner? Are you still eligible to benefit from this tax break?
In this guide, we’ll explain everything international property investors need to know about the UK’s Rent a Room Scheme — including who qualifies and how it works.
We’ll also examine some of the other deductions that non-resident homeowners can claim in order to reduce their tax bill.
Let’s get started.
How does the Rent a Room Scheme work in the UK?
The Rent a Room Scheme is a government initiative designed to help homeowners earn additional income by letting out furnished accommodation in their home.
The Rent a Room tax relief is worth up to £7,500 per year and if you share the income with someone else, for instance a partner or family member, the tax-free threshold is halved to £3,750 each.
If this Rent a Room Scheme threshold is met, you will then be taxed accordingly on the balance of income earned.
You can let out any part of your home – whether it’s a single room or more.
Who can avail of the Rent a Room Scheme in the UK?
There are specific criteria and responsibilities that must be adhered to when participating in the Rent a Room Scheme.
First and foremost, you must be a resident landlord, meaning that the property you are renting out must be your main or only home.
In other words, if you are an international property investor who owns property in the UK (and you are not a resident of the UK), you will not be able to avail of this scheme. But don’t worry, we have detailed some of the tax reliefs you can claim below!
It’s also important to note that the Rent a Room Scheme cannot be used if your property has been converted into separate flats. The scheme is designed specifically for those renting out individual rooms in a property where they live.
In addition, if you operate a bed and breakfast or guest house, you can qualify for the scheme, provided the operation is not considered a commercial business.
In this context, a non-commercial business refers to a smaller-scale operation, where the intention is not to generate large commercial profits, instead, it’s run in a more personal manner.
As a landlord under this scheme, you also must ensure the property is safe and in good repair.
Does Airbnb fall under the Rent a Room Scheme?
Technically no, it does not fall under the same scheme. However, UK hosts on Airbnb can receive a £1,000 tax free allowance on income earned from hosting.
That said, you must keep in mind that you cannot claim both the £1,000 tax free allowance and Rent-a-Room Relief on the same income.
Do I need a buy-to-let mortgage to rent a room?
No, you do not need a buy-to-let mortgage to rent out a room. As a resident landlord, you will still be living in the property and only renting out part of it, rather than leasing the entire property out to tenants.
How much property tax do non-resident property owners need to pay in the UK?
As a non-resident property owner in the UK, if you earn any rental income from letting out your UK property is subject to UK Income Tax.
The first £1,000 of rental income is tax-free under the property allowance, so you don’t need to report it if you earn less than that. If you earn over £1,000, you must file a tax return and choose between claiming the allowance or deducting expenses.
For rental income between £1,000 and £2,500, contact HMRC.
You must submit a self-assessment tax return if you earn:
- £2,500–£9,999 after expenses, or
- £10,000+ before expenses.
In the UK, the income tax system is divided into several bands based on taxable income. The Personal Allowance covers income up to £12,570 and is taxed at 0%, meaning no income tax is due on earnings within this range.
The Basic Rate applies to income between £12,571 and £50,270, which is taxed at 20%
The Higher Rate covers income from £50,271 up to £125,140 and is taxed at 40%.
Any income exceeding £125,140 falls into the Additional Rate band is taxed at 45%.
Council Tax
Council Tax may also apply – typically paid by tenants, but if the property is unoccupied, the owner is responsible.
Stamp Duty Land Tax (SDLT)
Stamp Duty Land Tax (SDLT) is due when purchasing property in the UK, with non-residents paying an additional 2% surcharge on properties over £250,000. Rates vary based on property value and whether it’s a main residence or additional property.
Ground Rent
Ground Rent applies if the property is leasehold and varies depending on the lease terms, typically ranging from £10 to £500 annually.
Freehold property owners are exempt from Ground Rent.
As a non-resident landlord in the UK, while you’re not eligible for the Rent a Room Scheme, the good news is you can still claim a range of tax-deductible expenses to reduce your taxable rental income – and ultimately lower your UK tax bill.
Here are some of the main tax reliefs available to you:
- Mortgage Interest – you can claim tax relief on the interest portion of your mortgage repayments.
- Repairs and Maintenance – Costs for fixing damage or general upkeep, for example – leaking roof or broken boiler, are deductible.
- Insurance – Policies such as landlord insurance can be claimed as an allowable expense.
- Legal and Professional Fees – Fees paid to solicitors, accountants or property managers related to your rental activity are tax-deductible.
- Letting Agent Fees – if you use a letting agent to manage your property, their service fees can be claimed.
- Council Tax and Utilities – if you’re responsible for paying these (for example, during vacant periods), these costs are allowable.
- Advertising Costs – The cost of promoting your rental property can also be deducted from your rental income.
It’s important to keep detailed records of all income and expenses is essential for accurate reporting and to ensure you claim everything your entitled to.
It’s also wise to speak to a UK tax advisor about property tax services, to make you’re maximizing reliefs and staying compliant with HMRC regulations.
I am a non-resident owner of UK property. How can PTI Returns help me?
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Need guidance? Schedule a no-obligation call with a property tax advisor.