I rent out my property

From holiday lets to renting out a room, here’s the tax basics every landlord needs.

Do you rent out a spare room in your home, run a holiday let, or rent out property using an app?

There are many ways you might earn extra money on the side from property or land you own.  

And while it’s easier than ever to rent somewhere out, the tax rules might seem a little complicated when you first open your door to guests. 

So, here are the key things every landlord needs to know: 

  • If you rent out a room in your home, you can earn up to a threshold of £7,500 per year tax-free – to check if this applies to you, visit Rent a room in your home: The Rent a Room Scheme on GOV.UK 
  • If you rent out a property (that you don’t live in), you also have a different allowance for any income earned from that – this is called your ‘property allowance’ and means you may need to pay tax if you make over £1,000

You can use your trading allowance (for example, from selling things) in addition to the Rent a Room Scheme and property allowance.

You can check if you need to tell HMRC about additional income on GOV.UK.

The big questions (and answers)

I have a main job and get paid through PAYE – doesn’t any tax I owe from side hustles get sorted through that automatically?  

Nope. Extra earnings are your responsibility to tell HMRC about, not your main employer’s. Income from side hustles isn’t included on your payslip. If you don’t tell HMRC about those extra earnings you might be given a penalty. 

Do I get a tax-free allowance for each different side hustle?

No – you have a single £1,000 tax-free trading allowance (for each tax year) and anything you earn from different types of side hustle all counts towards this.

For example, if you earn £800 from content creation and £500 selling crafts online, that adds up to £1,300 from trading. You would need to tell HMRC and pay tax on this as it’s above the £1,000 trading allowance. 

Income from renting out property is slightly different and has a separate allowance – find out what this means.

I need to pay tax on my side hustle – what do I do?

Firstly, you should check if you need to tell HMRC about additional income.

If you do need to pay tax on the money you’ve made from your side hustle, you will need to register for Self Assessment – you will need to do this by 5 October.

What happens if I don’t register for Self Assessment and pay tax on my side hustle income when I should?

If you don’t pay the right amount of tax, you may get a penalty. And late tax payments can mean the amount of interest you have to pay may grow – so the longer you put off paying, the more you may owe.

Should I keep records of what I buy and sell?

Absolutely. It’s your responsibility to keep full and accurate records of all sales, income and business expenses – even if you use a tax agent or accountant. You’ll need this information to complete your tax returns properly. Read more about keeping your pay and tax records.   

Can I use a tax agent or accountant to help?

You can appoint someone to deal with HMRC on your behalf like a friend, relative or a tax agent such as an accountant or bookkeeper.

What if I didn’t pay tax on my side hustle income from previous years? 

It’s really important to stay on top of your tax affairs – make sure you pay what you owe as soon as you can and talk to us as soon as possible if you haven’t paid for previous tax years.  Find out what you need to do if you have not told HMRC about income. 

We’re here to help people get on the right track with their taxes and avoid any fines or penalties. Our support services can help find a manageable way to help get your tax affairs sorted out. For example, if you cannot pay your tax bill in full, we may be able to set up a payment plan and pay it in instalments. This is called a ‘Time to Pay’ arrangement.

We will always work to resolve any issues and find a solution.

I heard the rules for online selling have changed so you can only sell 30 items a year before you pay tax – is this true?

Fake news. The tax rules for online sales have not changed. You continue to have a tax-free trade allowance of £1,000 a year. What has changed is that online platforms must now share information with HMRC if you sell 30 items or more a year through their service. This doesn’t mean you necessarily owe tax on it or need to do anything. For example, if you sell 30 items and have made under £1,000 a year trading, you do not pay any tax on this. 

I sometimes sell my unwanted belongings – do I pay tax on this?

From listing that old lamp on an auction site because it no longer sparks joy, to selling some sad sweaters sitting at the back of your wardrobe – there’s nothing like a bit of decluttering. Just casually selling unwanted belongings from time to time like this? It’s unlikely you’ll need to pay any tax on it. 

It’s only if you sell a single personal item or collection for over £6,000 that you need to tell HMRC – as you might have to pay something called Capital Gains Tax. 

For more help, check if you need to tell HMRC about your income.

Help and support

If you need more support, we’re here to help – just ask HMRC online.

We also offer extra support if you have a health condition or if your personal circumstances make it difficult to contact HMRC.