Tax is a topic full of extreme complication but can also sometimes through out a cheeky little simplification here and there that is worth knowing about.
Now if the idea of having a lodger fills you with dread you can sigh off here. If you do have a lodger, or might have one, then keep reading!
The expenses incurred in connection with taking in a lodger are very complex and time consuming to calculate. What share of bills do they use, how many square foot is rented out, how many people live in the rest of the house, how much are they physically in the house. As you can see splitting out part of the use of a home becomes complex.
Luckily, despite popular opinion, HMRC bring in rules for simplification sometimes which are really useful. Rent a Room Scheme is one of them.
In short instead of doing the advanced maths required to work out the actual costs of providing space for your lodger you can simply deduct £7,500 from the rent you receive and only pay tax on the excess! If you’re a couple with a lodger you can each claim half against your respective half of the rent you receive.
Now if you use the simplification it covers all costs. You cannot then sneak other expenses through. If you want to claim actual costs you can but then you don’t get the relief. It’s one or the other.
HMRC have a pretty solid help sheet on this which you can see here.