united-kingdom rental-property tax-law
Rent-a-Room scheme in house with self-contained part
<p>My house has three floors, with part of the ground floor forming a self-contained part with kitchen/diner, shower room/toilet and a bedroom.
I am considering living on the upper two floors while I do not need all the space and letting part of it out to help pay down the mortgage.</p>

<p>I believe that because the ground floor part is self-contained, the <a href="https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2017" rel="nofollow noreferrer">Rent-a-Room scheme</a> would not be applicable if letting it out and thus any rental income from it would be taxable at my normal tax rate (unless I could take into account an amount of mortgage interest, proportional to the area, perhaps one third or one quarter)?</p>

<p>However if at the same time I let out a room in the two floors above, where I live (sharing living room, kitchen and/or bathroom), would that qualify for the Rent-a-Room scheme?</p>

<p>Thank you.</p>

<p>I spoke to Revenue &amp; Customs. The room within the top two floors can be rented out under the Rent-a-Room scheme; the self-contained part cannot.</p>

<p>If doing both at the same time, any unused part of the £7500 tax exemption can only be used against income from the room, it cannot be used against any income from the self-contained part, which would be fully taxable (minus allowed deductions, which include a fraction such as 1/3 of mortgage interest).</p>
