Calculating the proportion of expenses that are allowable when taking in lodgers

rivergold

Hi
I am going to be letting out a couple of rooms in my house and am considering going the non-rent-a-room-route so that I can offset some large expenses such as mortgage interest.

I know that not all of the mortgage interest can be an expense, if I am living in the property.

Does anyone know how the proportion is calculated?

In my case, I would be letting out two bedrooms in a house with three bedrooms, a lounge (so a total of 4 habitable rooms), and of course kitchen and bathroom ( a total of 6 habitable and non-habitable rooms).

So it is not clear to me whether the allowable proportion is (2/3 based on number of bedrooms, or 2/4 based on habitable rooms, or 2/6 based on total number of rooms).

Has anyone been involved in this kind of calculation?

Thanks!

clutton_2

why not ring the inland revenue and ask them ? they are very helpful

GingerSte

Hi Rivergold,

I'm in a similar situation. I rent out two rooms in a three bedroomed house. I would say that since the house will have three people in (under normal circumstances), I've split the bills three ways. It would be worth remembering, though, that if one lodger leaves, then either you would have to raise the other one's proportion of the bills (to half), or you would end up paying two thirds of the bills yourself.

rivergold

Thanks guys
Yes, ringing the IR was my next step (just can't on a Sunday and am impatient!) but I'm concerned that their website guidance on this area is most unclear. But as you say, they are a very helpful organisation.

I've decided that because I want to control who I live with, it's not fair to make a lodger pay more for bills, when there are just the two of us, if I'm veto-ing certain people who want to come in, cos then that lodger's monthly outgoings are not under their control. So I'll be asking a fixed amount of rent, out of which I'll pay bills myself.

There are no tax benefits to separating rent from bills because you cannot offset bills under the rent-a-room scheme (though I will ask the IR tomorrow what if the lodgers pays bills themselves - however, this seems too obvious a loophole).

wolvoman

rivergold wrote: »

Thanks guys
Yes, ringing the IR was my next step (just can't on a Sunday and am impatient!) but I'm concerned that their website guidance on this area is most unclear. But as you say, they are a very helpful organisation.

I've decided that because I want to control who I live with, it's not fair to make a lodger pay more for bills, when there are just the two of us, if I'm veto-ing certain people who want to come in, cos then that lodger's monthly outgoings are not under their control. So I'll be asking a fixed amount of rent, out of which I'll pay bills myself.

There are no tax benefits to separating rent from bills because you cannot offset bills under the rent-a-room scheme (though I will ask the IR tomorrow what if the lodgers pays bills themselves - however, this seems too obvious a loophole).

I've considered offsetting the mortgage interest as a portion instead of using rent-a-room, particularly down here in London where £350 per week is very low.
Be interested to hear whet the IR say.