Best way to share a house?

User771_2

I am currently sharing a flat with a friend. We jointly rent the place.
I am now in a position to buy somewhere of my own. I'm happy to continue to share with my current flatmate though. I would obviously want to split the bills, and charge some rent although quite a bit less than we pay now.

However it looks like we can't just do this informally. That my flatmate would count as my lodger. And so I'd end up having to pay income tax on the rent and bill money received! This doesn't seem right, we split our rent and bills now and don't pay additional tax on the money I give her for bills etc.

Have I misunderstood something?

RAS

Depends how much you charge. Check out the spare room allowance.

xylophone

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

G_M

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with their resident landlord, and shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' and 'same property' (S31 & Schedule 1 (10).

There is advice for landlords considering taking in lodgers here:

LodgerLandlord (General information site)

Landlordzone (General advice on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (Government scheme for tax-free income from lodgers)

21 tips (Tessa Shepperson's Lodger Landlord website)

User771_2

Thanks for the info.
Looks like with London rent prices, even if I make the rent very cheap, with the bills added in as well I'd end up paying considerable income tax.

Oh well I'd rather my flatmate kept the money than pay it in tax so I guess she'll be getting a very cheap deal. Actually I have a related question but I'll post it separately

G_M

User771 wrote: »

Actually I have a related question but I'll post it separately

If it is related, post it here.

harrys_dad

User771 wrote: »

Thanks for the info.
Looks like with London rent prices, even if I make the rent very cheap, with the bills added in as well I'd end up paying considerable income tax.

Oh well I'd rather my flatmate kept the money than pay it in tax so I guess she'll be getting a very cheap deal. Actually I have a related question but I'll post it separately

Income tax on the amount above the rent a room limit is only 20% (or 40% if you pay higher rate), so you keep 80%, makes more sense than letting her keep it all.