First house...friends living with me, confused!

xylophone

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

delmonta

HI Guys

Thank you for all your help, really appreciate it. I will consider working out some small amount of rent, but for now I am just doing them a favour and they know its short term. As far as sharing food, toilet paper etc, we have it sorted

Wow, so the rent a room scheme has gone up to £7500. So does this apply if you are renting two rooms in your house, or only if you rent one?

Do you have to fill in a tax return for this, or if you are making under £7500, can you just leave it?

And finally, is this £7500 tax free from 'rent a room scheme' separate from the £10,000 income tax allowance?

Sorry for all the questions, I have scoured various websites but i get myself in a bit of a muddle, and you guys have cleared things up very quickly!!

Mojisola

delmonta wrote: »

It will also be fairly temporary, maybe for a year.

delmonta wrote: »

Thank you for all your help, really appreciate it. I will consider working out some small amount of rent, but for now I am just doing them a favour and they know its short term.

I think it's lovely that you're sharing your good fortune with good friends but, honestly, a year is not short term!

Put things on a more formal basis with lodger agreements, even if you only charge a small amount of rent.

seven-day-weekend

delmonta wrote: »

HI Guys

Thank you for all your help, really appreciate it. I will consider working out some small amount of rent, but for now I am just doing them a favour and they know its short term. As far as sharing food, toilet paper etc, we have it sorted Good!

Wow, so the rent a room scheme has gone up to £7500. So does this apply if you are renting two rooms in your house, or only if you rent one? I think it doesn't matter about the amount of rooms as long as the total does not exceed this

Do you have to fill in a tax return for this, or if you are making under £7500, can you just leave it? You don't need to fill in a tax return if you are below the threshold

And finally, is this £7500 tax free from 'rent a room scheme' separate from the £10,000 income tax allowance? Separate

Sorry for all the questions, I have scoured various websites but i get myself in a bit of a muddle, and you guys have cleared things up very quickly!!

See my comments in blue above, and the following link:

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

(WHoops, xylophone has already posted the link! Must read the whole thread before replyong )

onlyroz

Regardless of whether you charge rent or not, you should set out a clear set of rules and expectations, preferably in writing, before anybody moves in. This should cover:

- How the bills will be split
- How the housework should be split
- Who should pay for consumables such as cleaning materials, toilet roll, food staples like bread, milk and cooking oil
- Who should pay for repairs and accidental damage (e.g. wine stain on the carpet, boiler breakdown)
- Which areas of the house are communal and which are private
- Which facilities are communal, e.g. tv, broadband, fridge, freezer and cupboard space, use of washing machine, where clothes should be left to dry
- Policy on overnight guests
- Policy on smoking
- Policy on pets
- Car parking arrangements
- Timescale for moving out
- Notice period for moving out if you get fed up of them

Etc etc...

It really is a minefield and if you want these people to remain your friends you do need to get all of the above clarified in advance. I speak from experience, having had a "friend" lodge in our home for 8 months rent free. It's much harder, on an emotional level, to deal with the issues that arise when a friend is living with you than if they are a stranger.

seven-day-weekend

Wise words from onlyroz.

bamgbost

I agree with all the posters above.
Doing stuff like this with friends... almost certainly will end with tears somewhere along the way.

I have been in some situations when just renting a house with a few mates, and its not been pleasant.
So I can only imagine owning my house and having them over indefinitely!!
Wise words from the previous posters, so please think it over carefully!

delmonta

Hi Guys

again thanks for all the info, its been so useful!

So a couple of last things on the rent a room scheme : If I dont need to fill our a tax return for it, do I need to do anything to let anyone know I have signed up for the scheme? Or if I rent out a couple of rooms, for under £7500 a year, I can just get the lodgers to pay me, and dont need to declare anything? Sounds too good to be true

What if I had the rent money going in to my bank for years, and then got investigated, would I just have to prove I had people living in my house, paying rent all that time? Also, the government website still says £4250, so im guessing this fairly new, and hasnt been implemented yet.

Thanks for all the tips on what to get sorted with my friends, I will be clear with them about everything on the list, and I hope it wont put a strain on our friendship.

thanks again

[Deleted User]

"The less people pay for something, the less they respect it" - is my mantra.. Free rent can mean 'take the mickey' very easily.

What happens when your two friends start bringing 'special friends' around? What if they want a house party? So many what-ifs..

Edit - if you wanted to be a super-awesome friend, charge them a cheap rent, but put some of the money aside in the bank, then when they move out, give them a nice cheque each to help them get going in their next place.

Edit 2: I think this sounds like what I'd do with my kids

seven-day-weekend

delmonta wrote: »

Hi Guys

again thanks for all the info, its been so useful!

So a couple of last things on the rent a room scheme : If I dont need to fill our a tax return for it, do I need to do anything to let anyone know I have signed up for the scheme? Or if I rent out a couple of rooms, for under £7500 a year, I can just get the lodgers to pay me, and dont need to declare anything? Sounds too good to be true

What if I had the rent money going in to my bank for years, and then got investigated, would I just have to prove I had people living in my house, paying rent all that time? Also, the government website still says £4250, so im guessing this fairly new, and hasnt been implemented yet.

Thanks for all the tips on what to get sorted with my friends, I will be clear with them about everything on the list, and I hope it wont put a strain on our friendship.

thanks again

You might find this link useful. Amongst other things, it says to keep accounts (I used to just keep a simple spreadsheet), but if you income from lodgers is less than the allowance you don't have to do anything else.

https://www.moneyadviceservice.org.uk/en/articles/rent-a-room-scheme-how-it-works-and-tax-rules

The increase has only been announced in the last week, in the Budget, I don't know when it takes effect.