Rent A Room

Rent A Room

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The daughter of a client has approached me with a situation I have never come across before.

Basically, she was given a house from the estate of her grandmother, which she lives in.

In April 2014, her boyfriend moved in with her, and she has been charging him a monthly rent for this.

She now needs to complete a personal tax return, so would this be covered by the rent a room scheme.

The amount she has received is in excess of the rent a room limit, so a tax liability will be due even with the rent a room exempt amount.

Replies (8)

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Portia profile image
By Portia Nina Levin
29th Jul 2015 11:57

Surely

If they are cohabitees and he is contributing to the household expenses, it is not even income in the first place, and so rent-a-room does not even come into play.

Do they have separate rooms? Is the rent he is paying being charged under a formal rental agreement? Or is she just saying "these are the costs, you can pay half"?

Thanks (1)
By cheekychappy
29th Jul 2015 11:56

Rental business or contributing their share of the household bills? Seems the latter to me and should be going nowhere near a tax return.

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By gboy1980
29th Jul 2015 12:01

Thanks but...

Was certainly my first thought, however TOTAL household costs are circa £4k a year, and he ha paying in excess of £6k per year

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Portia profile image
By Portia Nina Levin
29th Jul 2015 12:04

My advice to her
Would be not to be too surprised when he buggers off with someone else.

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By cheekychappy
29th Jul 2015 12:08

Are you sure?

£4k per annum to run a household? Are they living in a caravan? Food shopping alone for a couple would swallow most of the £4k

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By Marion Hayes
29th Jul 2015 12:40

N/A

Portia is right - rent a room is where you take a lodger, who lives in a separate room to you, and pays a share of the running expenses.

This is not a lodger, if he left he would not simply look for another lodger, there is more involved than just a financial arrangement. If they separate a way down the line she may find that he has built up a beneficial interest in the property which would never occur with a lodger.

Not a tax return item

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Replying to RavD79:
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By MJ-
29th Jul 2015 13:34

yep

Marion Hayes wrote:

Portia is right - rent a room is where you take a lodger, who lives in a separate room to you, and pays a share of the running expenses.

This is not a lodger, if he left he would not simply look for another lodger, there is more involved than just a financial arrangement. If they separate a way down the line she may find that he has built up a beneficial interest in the property which would never occur with a lodger.

Not a tax return item

 

I agree with Marion Hayes, Rent A Room would not come into this situation, it appears your client is trying to use this as an excuse in the attempt to reduce tax liabilities 

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Replying to Tax Dragon:
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By Wanderer
29th Jul 2015 13:37

How?

MJ- wrote:
 it appears your client is trying to use this as an excuse in the attempt to reduce tax liabilities 

How so?

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