Rent a room scheme

kinger101

penwise wrote: »

Thanks for the reply

I am not sure what the above means

This is from the HMRC website;

Temporary division

Whether such a division is temporary is a question of fact. You should think about factors such as the following in considering it:

Would structural alterations be necessary to undo the division?
How long has the residence been divided?
How long is the division intended to continue?
Could possession of the flat be obtained separate from the property as a whole?
Is the flat separately supplied and metered for mains services?
Does the flat have its own unique postal address?
Does it have its own separate entry?
Would a mortgage lender be prepared to lend on the security of the separate flat?
This is not an exhaustive list of factors to be taken into account and it is not definitive. There may be others relevant to your case.

It is impossible to give any hard and fast rules that will provide a decision in all circumstances. The officer responsible for the case must decide each case on its own facts.

In disputed cases photographs will be essential and personal inspection of premises desirable. The guiding question is how confident would you be of being able to convince the Commissioners that, on a common sense interpretation of the available evidence, the division is not temporary.

---

NB: HMRC manuals should always be take with a pinch of salt; they often divert from primary legislation, or exploit uncertainty in their favour.

Another view here;

http://www.taxation.co.uk/taxation/articles/2001/12/04/1482/replies-queries-4

So it's shades of grey. Do as much as possible to tick the temporary boxes. Same postal address. Single insurance policy. No separate elec/gas meters.

In my mind though, if you have the intention at some point to convert in back into a single residence, it is in fact a temporary division. All the other stuff is window dressing.

Guest101

Don't agree. Sorry kinger. Edit, just re read the last few lines - this is great advice. Apologies

For capital gains purposes and so forth, you're right. But hmrc does not govern tenancies, just tax.

Op: where would the lodgers post be delivered? Would he have seperate gas and electric meter? The setup screams tenancy in a lot of ways. I'm not saying it is, but I'm not convinced it isn't

booksurr

kinger101 wrote: »

.....
In my mind though, if you have the intention at some point to convert in back into a single residence, it is in fact a temporary division. All the other stuff is window dressing.

whilst I agree with Kinger101 in respect of being able to use the rent a room scheme do remember that the "factors" set out by HMRC do not determine if the occupant is a lodger under housing law. You sound as though you are sailing very close to the wind in terms of having a tax law lodger but a housing law tenant.

kinger101

Guest101 wrote: »

Don't agree. Sorry kinger

For capital gains purposes and so forth, you're right. But hmrc does not govern tenancies, just tax.

Op: where would the lodgers post be delivered? Would he have seperate gas and electric meter? The setup screams tenancy in a lot of ways. I'm not saying it is, but I'm not convinced it isn't

The thread has nothing to do with type of tenancy though. I don't know why it got diverted there....I did not bring it up. OP asked a tax question. I gave a answer based on tax.

So why are you saying I'm wrong, and then discussing what I've said as if it's correct?

EDIT: I lifted the blue text from HMRC's manual on rent-a-room relief. Not CGT.

kinger101

booksurr wrote: »

whilst I agree with Kinger101 in respect of being able to use the rent a room scheme do remember that the "factors" set out by HMRC do not determine if the occupant is a lodger under housing law. You sound as though you are sailing very close to the wind in terms of having a tax law lodger but a housing law tenant.

Yes, I had not meant to imply the tax law can be used to determine whether the resident would be a lodger or tenant. OP should seed advice here too.

Guest101

kinger101 wrote: »

The thread has nothing to do with type of tenancy though. I don't know why it got diverted there....I did not bring it up. OP asked a tax question. I gave a answer based on tax.

So why are you saying I'm wrong, and then discussing what I've said as if it's correct?

Well the thread does have to do with the type of tenancy. But that's long winded. I misread the last few lines - which I do agree with.

I'm not commented on the tax implications directly. More that granting tenants rights would eventually complicate tax deductions under rent a room.

Guest101

kinger101 wrote: »

No, I'm merely saying that that whether the resident has a lodging agreement or tenancy agreement is not a test HMRC are likely to use in determining whether a claim to rent-a-room relief is valid. OP asked a taxation question.

Again sorry but you took it as a taxation question, others including me took it as a tenancy question. It's not clear cut.

kinger101

Guest101 wrote: »

Again sorry but you took it as a taxation question, others including me took it as a tenancy question. It's not clear cut.

Lol, cross post/edits...I think we agree. There is a housing law issue to be addressed too.

Guest101

kinger101 wrote: »

Lol, cross post/edits...I think we agree. There is a housing law issue to be addressed too.

Agreed. But good knowledge on the tax stuff - defo not my forte

oldbaldman

OP asked "Does anyone see any potential issues with this?"

Intention may be to grant licence, circumstances may determine not licence but tenancy.

http://www.lodgerlandlord.co.uk/2010/02/01/day-1-what-is-a-lodger-2/

gives advice. Not sure sharing just a shower room is sharing living space. From the wording the OP seems to wish to keep them and their "guest" separate as far as possible, which tends towards it being a tenancy.

Maybe if the OP provides sheets, vacuuming, laundry services they may make it more a licence despite not sharing accommodation apart from the shower room?

obm