Lodger query

cmgames

I am currently living on my own in a 3bedroom house and want to rent out two of the rooms. I have a couple of queries regarding lodging. If an adult and a minor rent one room and another adult rents the other room, does that count as 2 lodgers to qualify for the rent a room scheme?

Also, it says the maximum rent per month I can attain is £350 per month. If I was to include bills in the rent so for example i rented the two rooms for £350 + extra for rent would I remain tax free? Also, would i need to declare my extra income even if I do not attain £350 rent per month?

PasturesNew

The rent a room scheme doesn't care how many you have, it's all about the total amount you can have tax free in any one tax year. You can have 100 in the room, but it's just the first £4250 in total that is tax free to you.

You can separate rent/bills, so only the rent is counted towards the tax free amount.

You don't need to declare it if you don't go over the £4250.

G_M

Remember, 2 is the maximum number of lodgers you can have in a private house (providing you have the rooms) before your house becomes an HMO (House in Multiple Occupation).
With 3 or more lodgers the HMO regulations bring in expensive extra safety requirements, which must be complied with.

From Landlordzone.

00ec25

PasturesNew wrote: »

You can separate rent/bills, so only the rent is counted towards the tax free amount..

pasturesnew is INCORRECT

if you opt for rent a room then the TOTAL INCOME you receive is what matters, it is irrelevant if you split this into rent and/or contribution to bills

this is clearly explained in the HMRC helpsheet at the example using "John" who receives £150 contribution towards light and heat, that 150 is added to the "rent" to give the total receipt.

method a) is the normal calculation - ie total income less eligible expenses (eg gas, electric, water, council tax etc)

method is the rent a room calculation - ie every penny in excess of £4,250 total receipts is taxed, that total includes "rent" and any "contribution" to bills. It is very clearly explained in the HMRC guidance that, if you claim the rent a room scheme (ie method b), you cannot deduct ANY bills/expenses. So you cannot pretend that some income is a contribution to bills as that is the equivalent of trying to deduct the costs of expenses, which is NOT allowed if you want to claim 4250 tax free.

clutton_2

""Remember, 2 is the maximum number of lodgers you can have in a private house (providing you have the rooms) before your house becomes an HMO (House in Multiple Occupation). ""

if these two people are related then it will not be classified as a HMO as the two folks will form one "household" - each person, or sets of related persons, form a household under the 2004 Act....