Rent a Room Scheme - Definitions of Expenses

The Rent a Room Scheme Method A Calculation of taxes allows individuals to deduct expenses from gross receipts. What is the definition of Expenses? Can the following be interpreted as an expense; -some pre-defined percentage of the Mortgage, required to supply the room? -Utility Bills such as Gas, Electricity and Water required to supply the room?

Hi,
Please refer to link below for a list of allowable expenses.
Work out your rental income when you let property: Allowable expenses
This guidance also advises ‘the full amount of your mortgage payment — only the interest element of your mortgage payment can be offset against your income’ however please see guidance on the same link Changes to tax relief for residential property,  ‘From 6 April 2020 Income Tax relief on all residential property finance costs is restricted to the basic rate of Income Tax.’
Guidance relating to the apportionment of expenses can be located at:
PIM2100 - Deductions: main types of expense: expenses for own home
Thank you.
 

Before getting a lodger refurbishing/decorating a room and installing a onsuit. When preparing room for rent are the costs tax deductable. When lodger has use of whole of property has own bathroom Is it 50% of bills utilites insurance council tax Thanks

[Dispaly name amended - Admin]

Hi higgins_k2,
Thank you for your question. As per PIM2505 found here: Beginning and end of a rental business: commencement PIM2505 expenses may incur before rental business beings, in these circumstances, special rules apply.
Please refer to the attached guidance for advice.
Thank you.

1) If the Rent a Room Scheme applies and my yearly rental income is less than £7,500, can I claim mortgage interest as an allowable expense? 2) If the Rent a Room Scheme applies and my yearly rental income is more than £7,500, can I claim mortgage interest as an allowable expense? 3) Regarding: "From 6 April 2020 Income Tax relief on all residential property finance costs is restricted to the basic rate of Income Tax" - what does that mean?

Hi ,
 

Thanks for your question. You may only claim allowable expenses if you are not using the rent-a-room relief as pointed out in the following guidance : Rent a room in your home  . To answer question 3 of your query, since 6th April 2020, residential finance costs have been restricted to the basic rate of 20%. I have attached a link to gov.uk which offers further insight into the matter and contains examples : Tax relief for residential landlords: how it's worked out  . Thank you .