hosting students and tax/rent a room

diannecro

Hi anyone who can help, We host students for a local college , up to last September we only had 1 and this fell just into the rent a room allowance £4250.We now have 2 so from sept2013 to july2014 this will come to 9500.I would like this to be seen as self employment on my part but due to joint mortgage I can see this isn't possible but would still like in taken into account when trying for remortgage?? First not sure how to go about this when would I contact hmrc am I out of time or would this go on next year?
Should I contact hmrc now and when would tax be due?
Thanks

00ec25

rental income is not self employment, it has its own status as property income on the property pages of a tax return

do you intend to continue to uses the RAR scheme and so now pay tax on the excess over 4,250?

you will need to register for self assessment and submit the return by 31 October 14 (for period 4/13 to 4/14) if done on paper , or, if done online then you have until 31/1/15. Tax must be paid by 31/1/15 at the absolute latest

when you say joint mortgage are you married ?
if yes then the income must be split between the 2 of you either on 50/50 basis (joint tenancy) or in unequal measures of owned as tenants in common and you have submitted a Form 17
if not married then the income can be split anyway you want including 100/0 as the existence of a joint mortgage is irrelevant in terms of how the income is to be allocated (but relevant in terms of claiming expenses if you do not use the RAR)

typically rental income is not taken into account when calculating your mortgage borrowing limit for the home you live in because the lenders do not regard that as a reliable source of income compared to employment income

diannecro

Ok thanks for that, so no panic regarding submitting , regards mortgage worried when submitting statements surely money will be questioned , although I do everything for students ie: food, washing , car lifts, etc the money does make a difference to income and we have the room to do this for the college.
Thankyou

jimmo

Provision of food and washing suggest that you are not letting, as such, but trading rather like a guesthouse or B&B.
http://www.hmrc.gov.uk/manuals/bimmanual/BIM22001.htm
Rent a Room can still apply but it works on an annual, tax year, basis. See Basis periods here.
http://www.hmrc.gov.uk/manuals/pimmanual/PIM4001.htm
So I am afraid you need to consider the whole of the tax year 2013/14. I assume you had 1 student from April 2013 to July 2013 and 2 students from Sept 2013 to April 2014 so imagine that your gross income for the tax year will be in the region of £6375.
You now need to consider whether to use Rent a Room for the year or declare a trading profit (or loss).
There are various tax options open to you, e.g. Rent a Room, sole trader or partnership but, for tax efficiency, it would be really helpful to know whether you are married or not and the level of your respective incomes, non-taxpayer, basic rate or higher rate.
I am no expert on mortgages but can’t see what you are trying to achieve. As far as I know if you can achieve the best tax solution you will be able to declare better joint net income in your mortgage application.