House Shared with two lodgers

[PeterLondon]

I have owned my currpent property for 10 years and it is now about worth about £400k more than I paid for it. ~£800k today

Two lodgers stay with me and occupy about 35% of the house . I claim Rent a room relief

I am aware that I get the last three years of ownership but I do not expect to sell for another 10 years.

If I sell in five tears and the house is worth 1,200k I would of made £800k .

I have heard two seperate peices of advice

(1) I would pay tax on 35% of £800k * (17/20) - £357k less 40k letting release = £317k tax liability
(2) If thetenants are sharing meals tv etc with me and the rooms are not cut off I have no laibility

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the person who advised me (1) above said if I got rid of one tennant now when I sell the periods I rent to just one lodger would all be exempt form CGT , as I may sell now the calcualtion would be
I would pay tax on 35% of £800k * (10/20) - £210k less 40k letting release = £170k tax liability

Off course tax legislation may be different then but I pay tax on but currently paying tax on the rentlal income at my marginal rate on everything over 4250 means that I would be marginally better off asking one lodegr to go and I would have a spare room

I asked my MP and they refered me to the HMRC leaflets that to my mind was ambigous

Help please

regards

Peter

[PeterLondon]

Corrected
(1) I would pay tax on 35% of £800k * (17/20) - £238k less 40k letting release = £198k tax liability @28%I would pay tax

Corrected
on 35% of £800k * (10/20) - £140k less 40k letting release = £100k tax liability@28%

[PeterLondon]

Please excuse my poor calculation above I hope the general question is clear aboput how the PPR is reduced if at all by having more than oen lodger

The revenue seem to think it is

I was checking the internet and not wishing to muddy the water the link below appeared that coins the term lodger relief inplying a resident landlord who sharers meals etc has in effect the benefit of assuming they occupy one "extra" bedroom
if this is the correct treatment than my PPR would be reduce by 17.5% not 35%

advice please






http://blogs.telegraph.co.uk/finance/ianmcowie/100008808/never-mind-the-riots-feel-the-13-5pc-yield-on-student-buy-to-let/