Subletting a parking space - do I pay tax?

Annisele

I'm not sure if this belongs here or on the "cutting tax" board; I'd be grateful if the mods would move it if it's in the wrong place.

I'm shortly going to be moving to a new flat. I'll be a tenant, with an AST, in England. I'll be subletting a parking space, but I don't know if that means I have to pay any tax or do anything with respect to HMRC.

• My new flat comes with a parking space.
• I don't have a car.
• The tenancy agreement prevents subletting any part of the property without the LL's consent - but the LL's agent has agreed, in writing, to let the parking space for me.
• In theory, I'll be receiving £75 per month from the person who rents the parking space.
• In practice, the person who rents the parking space is just going to pay the LA £75 a month, and then I'll pay £75 a month less rent than I would have done if I'd kept the parking space. So, the LL will get his entire rent, but the LA will collect it from two different people.
• If the parking space renter doesn't pay their £75 for any reason, then I'll be liable to pay that £75 to my LL.

So - do I have to add £75 a month to my income on my tax return, and pay income tax on it?

Or will I be starting a (very tiny) business, and I can say that the £75 income I get from the parking space is offset by the £75 it costs me? (In that case, do I have to tell HMRC about it?)

Or am I worrying over nothing, and I can just let the LA collect the £75?

Many thanks.

(Edit: I did ask the LA, but I just got a bemused look and a "nobody's ever asked that before; I'm sure it'll be fine").

sinizterguy

No.

It's not your income.

You just pay a little less rent.

The landlord will pay tax on that income, less whatever cut the letting agent takes.

GDB2222

I'm sure it'll be fine

GDB2222

sinizterguy wrote: »

No.

It's not your income.

You just pay a little less rent.

The landlord will pay tax on that income, less whatever cut the letting agent takes.

I think it is the OP's income for tax purposes. Arguably, part of the rent the OP pays is offsetable against the rent received, but determining how much would be difficult. In practice, most people in that position would not worry about the tax and just keep their fingers crossed.

vax2002

Who owns the parking space
Who will the rental be paid to ?
There is your answer to who has tax liabilities.

Kynthia

It seems to me that the landlord is letting their flat without a parking space for a price lower than when they let it with a parking space. Then they are also letting the parking space to a seperate customer.

If you aren't receiving the income, paying the extra £75 if a customer can't be found or when there are voids, chosing who to rent the space to, setting the price, etc, then it is not your income to declare.

Annisele

Thanks all - seems opinion is divided.

My LL is definitely letting the parking space to me; its on my tenancy agreement and I have permission to sublet it. I do get to choose who to rent the space to (though in practice I've chosen the guy who's renting it from the existing tenants).

So, I think it probably is my income. I think it's fair for me to say that it costs me exactly the same amount that I receive for it and therefore I should pay no tax - I doubt even Mr Osborne would be shocked by that argument

jackomdj

Actually I bet it costs you more as it costs you the £75 to rent it then I am sure you have expenses to do with renting it out, letting agents fees etc... so I suspect it is making a loss and you could claim a reduction in your tax bill to offset these losses :-)

chewmylegoff

Either (i) the LL is receiving the income or (ii) you are receiving the income but your business is incapable of making a profit as the cost of you renting the space is at least equal to and possibly more than the amount you "receive". Therefore your maximum tax liability is £0 even if you technically should declare it.

Anyway, since you never receive the rent, I don't think you need to bother HMRC with this. You could ring them up and pose the question to them but it will probably just confuse them.

00ec25

Annisele wrote: »

Thanks all - seems opinion is divided.

My LL is definitely letting the parking space to me; its on my tenancy agreement and I have permission to sublet it. I do get to choose who to rent the space to (though in practice I've chosen the guy who's renting it from the existing tenants).

So, I think it probably is my income. I think it's fair for me to say that it costs me exactly the same amount that I receive for it and therefore I should pay no tax - I doubt even Mr Osborne would be shocked by that argument

you are correct
there is also the added reason that it is a non cash transaction aka benefit in kind - you receive a reduction in the rent you have to pay (a benefit) in return for allowing the money to be paid direct to the LL/LA rather than through your own bank account (the in kind)

you declare it as a balanced income and cost with nil tax to pay