Using Your Home to Make Money: Practical Ways to Earn Extra Income
Published 30th of April 2013·Updated 14 April 2026
Reviewed by: Reviewed for accuracy April 2026
Your home can generate extra income in several ways: renting a spare room under the government's Rent a Room scheme (up to £7,500 per year tax-free), letting your parking space, offering your property as a film or photography location, or running a business from home. Which option suits you depends on how much disruption you are willing to accept and how hands-on you want to be.
Short Summary
The Rent a Room scheme allows UK homeowners and tenants (with landlord permission) to earn up to £7,500 per year tax-free from renting a furnished room in their home. Income above this threshold must be declared to HMRC.
Renting out a parking space is one of the lowest-effort ways to generate regular income from your property. In cities and near train stations, a parking space can realistically earn £50 to £500 per month depending on location.
Any money you earn from your home is likely to be taxable above certain thresholds. You are legally required to declare self-employment income to HMRC by completing a Self Assessment tax return.
How does the Rent a Room scheme work?
The Rent a Room scheme lets you earn up to £7,500 per year tax-free from letting out a furnished room in your main home. This applies whether you own or rent (provided your tenancy agreement permits it). Income below the threshold does not need to be declared; income above it must be reported through Self Assessment.
You can let to a permanent lodger or to short-term guests. Sites including SpareRoom.co.uk and Airbnb allow you to advertise rooms to different types of tenant. SpareRoom is generally better for finding lodgers who want a stable arrangement; Airbnb suits occasional short-term letting where you want flexibility.
Before taking on a lodger, check your mortgage lender's terms if you own the property. Most lenders permit lodgers under the Rent a Room scheme, but it is worth confirming. If you rent the property, you will need explicit written permission from your landlord. Subletting without permission is a breach of most tenancy agreements and can result in eviction.
How much can you earn from renting out a parking space?
Income from parking spaces varies significantly by location. In London, a parking space in a residential street near a Tube station can earn between £200 and £500 per month. In other UK cities, £50 to £150 per month is more typical. Near major sports venues, concert arenas or airports, occasional event parking can be highly lucrative.
Platforms such as YourParkingSpace.co.uk and JustPark connect space owners with drivers. Both take a commission of around 15 to 20 per cent of the booking fee. Income from parking space rental is taxable above the £1,000 property allowance unless combined with rental income, in which case standard income tax rules apply.
Can you make money by renting your home as a filming location?
Film, television and advertising productions regularly rent private homes as locations. The income is potentially significant: interior shoots can generate £1,000 to £3,000 per day, while exterior-only shoots may pay £500 to £1,500 per day. The main drawbacks are disruption, the requirement that you vacate the property during the shoot, and the risk of minor damage to furnishings.
Agencies such as Lavish Locations, Amazing Space and i-locate connect homeowners with production companies. These agencies take a commission of around 25 to 30 per cent. Your home does not need to be grand or unusual; production companies often specifically seek ordinary, realistic domestic settings.
Check your home insurance before agreeing to a shoot. Standard home insurance policies may not cover commercial use of your property. Notify your insurer in advance and ask whether a temporary endorsement is needed.
What home-based business activities generate income?
Running a business from home avoids commercial premises costs and can be highly profitable. Common home-based income streams include:
Childminding and tutoring: Both require registration or qualifications but are in consistent demand. Ofsted-registered childminders earn between £5 and £12 per hour per child in most parts of England. Private tutors with relevant qualifications charge £25 to £60 per hour in most subjects.
Crafts and handmade goods: Platforms including Etsy, Not On The High Street and local craft fairs allow makers to sell handmade items. Jewellery, candles, knitwear, art prints and ceramics sell well online. Factor in the cost of materials and platform fees (Etsy charges a listing fee and 6.5 per cent transaction fee) when pricing your work.
Ironing and laundry services: Advertise locally through community Facebook groups, Nextdoor or cards in local shops. A realistic rate for ironing is £15 to £25 per hour. It requires minimal setup costs and can fit around other commitments.
Dog walking and pet care: Rates for dog walking in the UK typically run from £10 to £20 per hour. Platforms including Rover and Tailster connect dog walkers with local owners. Dog boarding (looking after dogs overnight at your home) can generate £25 to £50 per night.
What are the tax rules for money earned from your home?
Any income you earn outside employment is likely to be taxable. HMRC provides two useful allowances:
- The Property Allowance: up to £1,000 per year of property income (such as from a parking space or filming) can be received tax-free without needing to declare it.
- The Trading Allowance: up to £1,000 per year of self-employment or casual income can be received tax-free without declaration.
If you earn above these thresholds, register for Self Assessment with HMRC and file a tax return. Do this promptly: the deadline for registering as self-employed is 5 October following the end of the tax year in which you started earning. Failure to register and declare income can result in penalties from HMRC.
| Income type | Tax-free allowance | Taxation above threshold |
|---|---|---|
| Room rental (Rent a Room) | £7,500 per year | Standard income tax rates |
| Parking space / filming location | £1,000 per year (property allowance) | Standard income tax rates |
| Self-employment (crafts, services) | £1,000 per year (trading allowance) | Standard income tax rates |
Frequently Asked Questions
Do I need permission from my mortgage lender to take in a lodger?
Most mortgage lenders permit lodgers under the Rent a Room scheme without formal permission, but you should check your mortgage terms before advertising. Some lenders restrict letting to a lodger while you are the occupying owner. Contact your lender's customer service team to confirm.
Is Airbnb income taxable?
Yes, if it exceeds your applicable tax-free allowance. If you are renting a room in your own home and meet the Rent a Room scheme conditions, the first £7,500 per year is tax-free. Short-term letting of an entire property is treated differently: it falls under furnished holiday letting rules, which have their own tax treatment. HMRC's guidance on furnished holiday lettings is available at gov.uk/guidance/furnished-holiday-lettings.
Can I rent out my driveway if I am a tenant?
This depends on your tenancy agreement. Most standard tenancy agreements do not specifically address driveway rental, but subletting any part of the property typically requires landlord consent. Check your agreement and ask your landlord in writing before listing your space on a platform.
What insurance do I need if I work from home? Standard home insurance does not cover business equipment or public liability for customers visiting your home. If you run a business from home, speak to your insurer about a home business extension to your existing policy. Business-specific insurers including Simply Business and Hiscox offer combined home and business cover from around £100 per year for low-risk activities.
How do I find tenants for a spare room?
SpareRoom.co.uk is the largest dedicated room-rental platform in the UK and is free to list on. Gumtree and Facebook Marketplace are free alternatives with large audiences. For short-term or part-week lettings, SpareRoom's Monday to Friday section specifically caters to working-week commuters who need a room for a few nights rather than a permanent arrangement.