Enter Alice Thompson's house and you descend a winding staircase to emerge into light.

Or in this case a brightly painted sitting room which opens onto the garden. Light comes in at ground level. It's as if the building has somehow turned the world upside down.

It's not inappropriate. Thompson does something similar in her writing. She takes the world in her hand, gives it a twist and then describes what she sees from an unexpected angle. Take her new novel, Burnt Island. Not Burntisland, note. Burnt Island, a fictional dod of land off the coast of Scotland, an island of turquoise seas and vertiginous rocks and "apocalyptic" sunlight. Definitely not Burntisland. In fact, the nearest physical corollary of Burnt Island might be Shetland, where Thompson once worked as writer-in-residence. "That place really overcame me, actually," she says. "Just in terms of the landscape. In a bizarre way it reminded me of Venice because of the light and the space and the water."

So it's really the landscape of Shetland that's haunting this novel? "Yes," she smiles.

That said, Thompson's island is ultimately a Scotland of the mind, an interior space. The same is true of Thompson's book itself. In this, her sixth novel, she is once again playing around with ideas of reality and imagination, perception and psychosis and how, sometimes, all of these things can collide.

"I'm really intrigued by how each individual has a unique perception of the world," she says as we sit on either side of the kitchen table, "and in how appearances and reality can be disjunctive and what a shock that can be – whether it comes down to personal relationships or ambition. How what you want and what is real is different and how some people find that really difficult to comprehend. And some people never do. They go through life retaining certain illusions."

But then, she says, we all do to some extent. "Some of those illusions are necessary." Like our illusion of immortality. How would we get through the day if we were constantly worrying that death was just years, months, days away, after all ?

The pleasure of Thompson's writing lies in its slipperiness, in the sense that what we see as concrete reality, hard and firm, might be more fluid than we think. In Burnt Island Max, a writer, is hoping to be inspired to write a book on the island. In the end, though, the island begins to rewrite him. "Max knew madness was only a little side step to the left of imagination," Thompson writes at one point.

It's clear that Max's internal tracking is drifting leftwards constantly throughout the book. His imagination is getting the better of him. "I think as a writer one is always susceptible to the imagination taking over from what's really happening," Thompson admits. "I think I've lived with that feeling of wondering what's real and what's not for most of my life."

Not that she's drifted leftward herself. "No, fortunately not. In some ways I'm horribly rational. I'm very logical and I think as a writer, once you've done the initial drafts, you have to be very clear-sighted and pragmatic about how you edit. You have to come out of your visionary state, as it were, and suddenly become quite cold about what you've written."

She's had plenty of practice over the years. Thompson has said in the past that she wanted to be a writer from the age of six, and if you ask about her childhood, she talks about books. "I read a lot. I had bad asthma so I was in bed a lot of the time. Books dominated my childhood. I loved Sword In The Stone, Watership Down. When I was a bit older I loved Raymond Chandler, detective stories, Earl Stanley Gardner." Her last book, The Existential Detective, played with some of the tropes of the form. "And then at university it was the classics, really."

The university in question was Oxford, where she went after leaving St George's School in Edinburgh. From there she travelled to a flea-ridden squat in Brixton and a role as keyboard player in the passably successful 1980s indie band The Woodentops (I tell her I still have my 7" single of Move Me at home). It's curious, I tell her, that when she's talked of that time before she seems to come across as slightly semi-detached. She recognises that description. "I was the only woman in the band and think, in that sense, you are a bit separate. I think I was." But that didn't spoil the experience. "I enjoyed it a lot and it was fascinating travelling so much."

Travelling was the main thing she did in The Woodentops, it seems (she had little input into the songs). What she got out of the experience was mileage, a chance to roam the world and eat breakfast in hotels. If nothing else, all that travelling, all that downtime, was a spur to work. "You wait around all day. You're on stage for two hours and you've probably travelled 200 miles to get there, so there's a lot of time. Which is why I recommend it. If you want to become a writer, join a pop band. You've got a lot of time to write."

Thompson left the band in the late 1980s. By then she'd published a novella, Killing Time. A stint editing The List magazine and a PhD on Henry James later, she devoted herself to writing full time.

What brought her back to Scotland? "London. I'd had enough of London. I was thinking about settling down and I didn't want to bring up a family in London. I missed the landscape in Scotland. The fact that it took me two hours to get out of the city when I was in London, whereas here I can walk five minutes and I'm by the sea."

Scotland is home, she says. "I wanted to come back."

Her first novel, Justine, won her the James Tait Prize and for the last two decades, more or less, she has been constantly working, constantly writing, constantly creating her own maps of a Scotland that are not quite Scotland. The process begins in longhand. And in cafes. "I love writing in cafes. JK Rowling was not the first writer to be writing in cafes."

It's hard to imagine her working away amid the rattling cups and rising conversations though. Her books are so anchored in their interior spaces you'd think she's need solitude and silence to find her way there. Not at all.

"I love the buzz of music and even people chattering in the background. I think, in an odd way, having that sound around me enables me to go into my head more. It's pretty solitary being a writer. It's really nice to go out and just be around people."

Not that her life is totally solitary. She lives with her son Isaac and she teaches creative writing at Edinburgh University. And there are always books. There have always been books.

At one point in Burnt Island, Max has effectively a crisis of faith. "There was no god. The Novel was dead and talent shows and pornography and war were the only things left in the world." Alice Thompson is not putting her own ideas into her character's head. "It's a thought that's occurred to me. It's not a thought I carry around. I have a lot of faith in the novel. I think this love affair we have at the moment with short-term things will pass and the novel will come into its own again."

The world turned right way up again, perhaps.

Burnt Island by Alice Thompson is published by Salt Publishing, priced £8.99, on Wednesday