With a lodger, can I off-set my household bills?

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    With a lodger, can I off-set my household bills?

    I was thinking of renting a spare room in my flat to a lodger. As I will declare the income to the tax man, can I off-set my household bills?

    #2
    Do you mean the Rent-A-Room scheme?
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
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      #3
      You have a choice. Either you use the rent a room scheme which gives you the first £4,250 of rent & other receipts (e.g. contributions to electricity, cleaner etc.) free of income tax, or you can do a gruesome and painful apportionment of your mortgage, electricity bills etc.

      http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017804

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        #4
        I hadn't heard of the rent-a-room scheme. I'll look into that and the other more time consuming method.

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          #5
          If I went for the 'gruesome' method, can anyone tell me the process?

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            #6
            Calculate floor area of any part of flat to which lodger has exclusive rights (i.e. bedroom & en suite bathroom? say 200 square feet); calculate floor area of entire flat (say 800 sq. ft).

            Apportion all expenses relating to flat to lodger. In the above example 25% of all expenses are deductible. That would require mortgage + utilities to amount to £17,000 per annum in order for you to be better off that way.

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              #7
              Oh my goodness. That is quite difficult for my poor little brain to work out. I think I'll stick to the rent a room scheme.

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                #8
                If I understand the system correctly, I deduct both my personal allowance (£6475) and my rent-a-room scheme allowance (£4250) from my rent turnover to achieve a figure which is taxable?

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                  #9
                  Do you have a job? Any other income?

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                    #10
                    I do have a job so presumably the personal allowances is taken into account already.

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                      #11
                      Correct. So it is taxable at your marginal rate of income tax - 22%, 40% or 50%.

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