Having lodgers (renting a room) when travelling abroad

Cyclonicity

The literature on having lodgers suggests that the house in which they lodge must be your main home (otherwise it's a tenancy).

The guidance online suggests that it's OK to "go on holiday for a few weeks", but is there a limit on how long you can be away from the property (while still being covered by the rent-a-room scheme) or is this up the discretion of the HMRC?

Obviously during the holiday, all measures would be put in place to assurance maintenance is done as necessary and lodgers' needs are met, and the mortgage provider (and house insurer etc.) would need to be informed.

anselld

If you are not resident the they are not lodgers and RaR does not apply.

booksurr

To have a lodger you must be a RESIDENT landlord, merely owning one property is not enough if you reside elsewhere

furthermore, if you go travelling then you will be an overseas LL. Rather confusingly HMRC refer to this by the term used in tax law "non resident". You will therefore need to comply with the rules of the Non Resident Landlord Scheme, you can forget about lodgers and rent a room as that would be tax evasion - not a good idea!

https://www.gov.uk/tax-uk-income-live-abroad/rent

Cyclonicity

What I'm trying to work out is where's the line between having a holiday and not being classed as a resident.

It states that you can be on holiday while having tenants, but a holiday could be anything from a weekend on the coast to several months in Thailand. Is it up to the discretion of the HMRC?

Nobbie1967

I imagine the HMRC would look at a number of factors to decide on residency such as do you have a permanent job that you are taking holiday from? If you just leave a job to go traveling then that would not be classed as being resident IMHO.

booksurr

Cyclonicity wrote: »

What I'm trying to work out is where's the line between having a holiday and not being classed as a resident.

what is the purpose of the trip abroad?

you say "travelling", if it is 100% that then yes you may define it as a (long) holiday and you would remain a resident LL, however take very careful note of the second link below as that is what may cripple you if you get the basis year wrong

if you intend to work whilst away then that is another matter as clearly it would not be your residence in that case

the definition of "residence" is set out in case law as a "matter of fact". "The judgement in Frost v Feltham [1980] 55TC10 gives some indication of the matters that are relevant in considering whether a property is a main residence."
http://www.hmrc.gov.uk/manuals/cgmanual/cg64435.htm

I suggest it is time you did further reading :
http://www.hmrc.gov.uk/manuals/pimmanual/pim4001.htm#IDASNWRG

G_M

You are absolutely right and I'm afraid there's no easy answer.

If the property is your normal residence, and you go on holiday, of course it remains your residence and your lodgers remain lodgers.

If you were, say, to get a temporary job abroad for 6 months (or whatever) with the intention of returning at the end of that contract, the property would no longer be your main residence for that perod, and your lodger would become a tenant, with exclusive occupation for the duration, and aquire significant rights. And you'd incur significant obligations.

Now between those two examples are a multitude of scenarios, and at some point the property slips from your residence to your BTL.

Many factors would be relevant in deterning the occupant's status:

* period of time you intended to be away
* purpose
* period of time actually away (you might stay longer)
* your employment status (ie you still have a job in the UK to return to? Job abroad?)
* what you do about contact addresses eg where do your bank statements go? Other official contacts
* how much of your stuff you leave in the property (some token bits or the bulk of your life's possessions)?
* whether anyone else has access (eg your family)
* who is paying the bills in your absence? The occupants?
etc

At the end of the day it's a question of fact - and a court/HMRC could determine the fact one way or another.

How many bedrooms in the property?

Miss_Samantha

I believe that travelling temporarily for 6 months does not necessarily change your principal residence as long as you keep it as your address and you let most of your belongings there.
In that scenario lodgers would remain lodgers.

Cyclonicity

Thanks for the answers all, much appreciated. I'll check out those links booksurr, cheers.

G_M, it's theoretical (trying to plot out how I go about it). Would most likely be a 3-bedroom property with 2 lodgers.

Also, happy new year everyone!

knightstyle

Many people go away for long periods and maintain their UK home as their principal residence, rule of thumb is that they must be in residence for 180 days or more. But this is only a guide and is open to interpretation.

booksurr

Miss_Samantha wrote: »

I believe that travelling temporarily for 6 months does not necessarily change your principal residence as long as you keep it as your address and you let most of your belongings there.
In that scenario lodgers would remain lodgers.

I am not aware of any such time limit or such definition. I suspect you are conflating the criteria used for capital gains tax and second homes as they are related to "principal residence" definition - although even then 6 months is an urban myth as the rule is "quality" of occupation not "quantity" of occupation

knightstyle wrote: »

Many people go away for long periods and maintain their UK home as their principal residence, rule of thumb is that they must be in residence for 180 days or more. But this is only a guide and is open to interpretation.

sorry but "residence" in the context you use it is only related to whether you are taxed in the UK on any income you receive from overseas or whether you are "non resident" and therefore only taxable on income which originates within the UK - hence my earlier reference to the non resident LL scheme

it is not a rule of "thumb", it's set values which determine residency status for that purpose and not open to interpretation:
You’re automatically resident if either:
- you spent 183 or more days in the UK in the tax year
- your only home was in the UK, you must have owned, rented or lived in it for at least 91 days in total, and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:
- you spent fewer than 16 days in the UK (or 46 days if you haven’t been classed as UK resident for the 3 previous tax years)
- you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

You will note that spending at least 183 days in the UK simply makes you liable to UK tax on your worldwide income. It does not automatically mean that you can use the rent a room scheme if you in fact live somewhere else and are therefore not a resident landlord.

In the OP's case the question is can he go abroad for more than 183 days and still claim RAR on the basis he has only one home and they retain lodger status. The answer to that is probably provided it is genuinely travelling rather than settling down in a single place for an extended period (then you would have 2 homes even if only renting the foreign one) and/or working whilst abroad (so it's not a holiday)