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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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"?
Rental business or contributing their share of the household bills? Seems the latter to me and should be going nowhere near a tax return.
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
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
yep
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
How?
it appears your client is trying to use this as an excuse in the attempt to reduce tax liabilities
How so?