Live in Landlord - Allowable Expenses

farthing_saver

Hi all,

I'm trying to submit my self assessment, but I'm having a bit of trouble finding information regarding my allowable expenses.

I found a number of guides, including the official HMRC one which states that an allowable expense is anything you have spent wholly and exclusively for the purposes of renting out your property.

While this helps in case I rent my property entirely, I'm a bit confused about my case.

I have a 2 bedroom flat and I'm renting out one of the rooms.

I'm paying all utilities bill, council tax and a service charge since it's an ex-council flat.

What are my allowable expenses in this case?

Is it just a case of halving all of the above, or it is more complicated than that? Am I right to also include half of the service charge or is it just utility bills + council tax?

Thanks in advance for any help

G_M

within the limits?


Rent a Room Scheme (HMRC guide for tax-free income from lodgers)



* Lodgers: advice & links for landlords & lodgers

farthing_saver

It's a bit above actually, so I want to do the calculations using both ways and decide what's best for me.

I'm just not sure how to calculate the allowable expenses in case I don't go with the rent a room scheme.

00ec25

farthing_saver wrote: »

I'm just not sure how to calculate the allowable expenses in case I don't go with the rent a room scheme.

HMRC do not set a specific method that you must use, instead they state that the calculation method must be "reasonable"
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2100

the ones most commonly used are :
a) room count
b) floorspace count

please understand from the outset you are letting ONE ROOM so the fraction (ie. %) calculation is 1 or the m2 floorspace of THAT room

the denominator will be the total number of rooms in the property (or total floorspace). It is acceptable in this context to exclude passageways such as halls and landings.
So, for example, as 2 bed property may/will have a kitchen, a sitting room/lounge, a bathroom, so the calculation in that case would be 1/5 of each allowable cost

using m2 may of course be advantageous if the let room is the bigger of the two

ALSO take particular note of the restriction when there are "heavy" costs in an single year