Lodgers and tax

Corelli

Good morning,

after a bereavement I am now part owner of a nice flat that is too expensive for us to maintain. A family member plans to live there but we would still need aditional income to keep it going.

So, current thoughts are that a lodger would be a good idea. The property is near a university so a student or someone else would probably like a very large double room there, complete with en-suite.

Thanks to this forum I have been reading up on the rent a room scheme, and have been studying Tessa Shepperson's LodgerLandlord site.

But what I cannot find is details of the tax implications. If the income from the rent were to be over £4,250 how does the tax work? Do you have to pay tax on the whole income, or just that which is over and above the £4,250?

I'd also appreciate information about how it works with the holidays for students. Of course, there is the Council Tax advantage but what about someone who wants to stay for the whole of their course but will be elsewhere during the summer? Is there a norm for this?

Thanks

anselld

You deduct £4250 as expenses from your income and pay tax on the remaining income.

However, unless you are in an expensive area students will not be paying that much for lodgings.

There is no particular norm for over summer. Students will obviously not want to pay for time they are not there but you may be able to negotiate a reduced retainer. Alternatively get someone else in over summer months.

Corelli

Thanks anselld. It is a very generous double room, so we were thinking a couple might want to share. It is a fairly expensive area, looking on right move and spareroom.com gives comparable rates. But we would be under if the room was empty over the summer.

graduate

When I was a student I paid half-rent over the summer as a retainer.

Guest101

Remember that for tax purposes this includes ANY money paid. So it's worth considering 'including all bills' as part of the rent.

gazter

If its nice, dont aim for a student, aim for a member of staff from the university, demand is often high. The problem with students, is if you arent their age, you'll be bewildered about their behaviour, they'll also eat massively into your energy bills been at home all day.

audigex

Students tend to be fairly lucrative in some ways, as they're fixed to the area for set periods, pay fairly good rates etc. They also tend to be fairly intelligent, reasonable people, although there are no guarantees....

They're also slightly problematic in that they're usually only around for 7-9 months a year and as mentioned probably live a very different lifestyle. As Gazter said, a better option may be to aim for a member of staff or perhaps PhD student (who are around all year and tend to treat it more like a job)

There's also the problem that they'll usually only be there for 1-2 years, and likely want to live with friends. Again a PhD student may be around for 3-5 years, and a member of staff 2-10 years.

There's no set procedure for summer: to a large extent it depends on the uni. You can choose to either rent for the year, discount in summer or rent for 9 months and either accept the difference or increase the prices to account for some of this.

I doubt you'll find a couple wanting a house share, and if you do be aware that although your family member will be the owner/part owner or whatever, they will be outnumbered in domestic disputes.

Corelli

Good advice from you all and we are very grateful. I'm laughing at the idea of students having a lifestyle that might be a bit ... alien... as I was a student once and had thought I would find it familiar. and then I thought more carefully about having moved on from that.

Yes, a member of staff of a PhD student does sound a more sensible option. Surely uni professors earn enough to buy though, don't they?

DRP

Corelli wrote: »

Good advice from you all and we are very grateful. I'm laughing at the idea of students having a lifestyle that might be a bit ... alien... as I was a student once and had thought I would find it familiar. and then I thought more carefully about having moved on from that.

Yes, a member of staff of a PhD student does sound a more sensible option. Surely uni professors earn enough to buy though, don't they?

yes, but they're not all professors!