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Hi.Read about rent a room relief and letting property generally here and here. You would not want to claim to be taxed this way as you would be taxed on £20,400 (£1,700 x 12) less the rent a room allowance of £4,250. No expenses or any part of the rent you pay the landlord would be deductibleYou should register for self-assessment using a Form SA1. In a full tax year, you will declare income of £20,400 less that part of the rent your landlord you pay that can be reasonablt applied to the two rooms you let. You would probably do that based on the size of the rooms. You cannot offset that part of the rent that applies to your room against the rent you receive from your friends. That would mean other taxpayers would effectively be subsidising your personal rental costs. You may be able to claim some of the running costs such as those incurred for heat and light and for the cost of any services you provide to your friends. Take a look here for more information on expenses.I hope this helps. Let me know if you have any further questions.