Rent a room scheme - more than 1 tenant?

Cyclonicity

I've done a lot of searching about and can't seem to find the answer to this...

The tax free allowance of £7500 (as of April '16) - can this be used for 2 lodgers? A lot of documents referred to 'lodger' in the single so I wasn't sure.

Cheers!

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 (21 tips from solicitor Tessa Shepperson + General information site)

Landlordzone (Various articles on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (HMRC guide for tax-free income from lodgers)



I see nothing to say you cannot have more than 1 lodger (note - not tenant) to qualify for the scheme, but beware the rules on HMOs.

Beware also the potential Capital Gains Tax liability with 2+lodgers.
https://www.gov.uk/rent-room-in-your-home/rent-bills-and-tax

HappyMJ

Rent a room has the word A in it. A definition of A is one.

Although 2 lodgers..i.e a couple on the one agreement would be fine in the one room.

You don't have to use Rent a room. You can rent out lots of rooms, use the actual expenses incurred and pay tax on the profit. There's lots of expenses you can claim. Mortgage interest, gas, electricity, water, council tax, insurance, service charges, cleaning products, some of the groceries (i.e toilet paper for toilet that everyone can use, washing up liquid for kitchen etc...). If you provide breakfast you can claim for breakfast ingredients as well.

G_M

HappyMJ wrote: »

Rent a room has the word A in it. A definition of A is one.

Although 2 lodgers..i.e a couple on the one agreement would be fine in the one room.

Although

2. The Rent a Room Scheme

The Rent a Room Scheme lets you earn up to a threshold of £4,250 per year tax-free from letting out furnished accommodation in your home. .....
You can let out a room or an entire floor.

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

kinger101

^
In relation to the above two posts, I can't see anything in the actual legislation which restricts relief to receipts from a single lodger;

http://www.legislation.gov.uk/ukpga/2005/5/part/7/chapter/1

786 defines the "rent-a-room receipts"

booksurr

HappyMJ wrote: »

Rent a room has the word A in it. A definition of A is one.

grammatically correct but somewhat irrelevant to the question asked re tax

the RAR allowance of 4,250 and from April 7,500 is against the total income per tax year from renting to lodgers. Note the use of the plural:
- you may have had 1 lodger replaced by another lodger so 2 lodgers over the course of a year who rented the same room consecutively
- you may have had 2 lodgers simultaneously in 2 different rooms
- you may have had a couple who pay independently of each other/split the bill between them but live as a couple.

EDIT as noted by kinger, the tax allowance is based on the total income received, not how many people paid into that total

Jim_Jupiter

7-8 years ago I had 2 lodgers under the RAR scheme whose combined rent fell under the threshold at the time. I wrote to HMRC to clarify the situation and had no problems.

Cyclonicity

Brilliant, thanks all.