What counts as using part of your home for business purposes?

Voyager2002

My friend is staying in my spare room, and has offered to contribute towards bills. Presumably this is not taxable income. But suppose that he stays for a longer time and makes regular payments: at what point am I considered by HMRC to be using part of my home for business purposes?

Obviously my main concern is to avoid having to pay CGT when/if I eventually sell my home. I would also rather not have to declare these payments on a tax return (can I avoid this by charging him less than the estimated amount of his share of bills, although presumably even a loss-making business is still using a premises for business purposes).

I have of course asked HMRC about this, but even their technical team did not answer the question. So I would value any thoughts on this from the MSE community.

BoGoF

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

You are not classed as running a business

Blowsbubbles

As above,  just a lodger ands as long as you don't earn over threshold you don't even have to decalare

Bookworm105

please define what you mean by "staying in my spare room"
- does friend sleep there? 
- does friend have another address (eg he is a Monday - Friday lodger)?
- will yours be the address friend uses for personal and official correspondence?
- what sort of business will friend be undertaking at what time of day
(if relevant - you will lose single person discount on your council tax - if relevant!)

You cannot use the rent a room scheme if the only use is for business purposes. Rent a room does not cover business use, only residential use.
HS223 Rent a Room Scheme (2023) - GOV.UK (www.gov.uk)

When you cannot use the Rent-a-Room Scheme

You cannot use the scheme if the accommodation is:

• not part of your main home when you let it
• not furnished
• used as an office or for any business — you can use the scheme if your lodger works in your home in the evening or at weekends or is a student who is provided with study facilities

Contribution towards bills most certainly is taxable income, but obviously can be offset against the actual bill to produce the profit figure. Profit is what you will pay tax on, not income alone when it comes to rental. No profit, no tax.

your thoughts on how to avoid tax are best forgotten.
Yes the property may be liable to CGT if the sole use is for business purposes. The correct way to avoid that is to have a lease which categorically states friend does not have sole and exclusive use of the space in your own home (using outbuilding would be a grey area). For example, you require that xyz personal possession is stored in the space and you can access that storage when you want to. 

if you feel that friend fits the definition of a lodger and therefore you wish to claim rent a room scheme, you do not have to declare that on a tax return if:
a) that would be the only reason for you needing to do a tax return (if you already have other reasons you must include RaR); and
b) (crucially) the gross income (including contributions to bills) is equal to or less than £7,500 (the RaR allowance) ... no profit, no tax 

theoretica

This sounds like a wording issue.  If you are renting a room out for someone to live in, you have a lodger, and the rent a room scheme means it is probably tax free.  You only get into CGT and other complications if you have more than one lodger or exceed the rent a room threshold.

'Business purposes' makes the person you are asking think you (or the friend) have set up a hairdressing salon or something in the spare room.