Having lodgers (renting a room) when travelling abroad

Miss_Samantha

booksurr wrote: »

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.

Hi booksurr,

It depends on the facts of the situation. I sort of remember that there are case law though I have no reference on hand.

Note that I was writing with tenancy law in mind, which has nothing to do with HMRC, as IMHO the main risk to be considered is whether the lodger(s) would become assured tenants, which seems to be what OP might be concerned about.

kinger101

Miss_Samantha wrote: »

Hi booksurr,

It depends on the facts of the situation. I sort of remember that there are case law though I have no reference on hand.

Note that I was writing with tenancy law in mind, which has nothing to do with HMRC, as IMHO the main risk to be considered is whether the lodger(s) would become assured tenants, and this seems to be what OP is concerned about.

I thought the OP's main concern was their entitlement to RAR relief (which isn't directly determined by whether it's a lodger or tenant, though some of the underlying deciders are common).

But you're right. If the "lodger" or "tenant" is not already in place, this ought to be their main concern. It would be foolish to grant anyone a tenancy in their absence! It could open up many cans of worms relating to eviction, mortgage and taxation.

It would be useful if the OP could clarify whether the person concerned is already a lodger. In that instance, I'm pretty sure they should continue to claim RAR.

booksurr

Miss_Samantha wrote: »

Hi booksurr,

It depends on the facts of the situation. I sort of remember that there are case law though I have no reference on hand.

Note that I was writing with tenancy law in mind, which has nothing to do with HMRC, as IMHO the main risk to be considered is whether the lodger(s) would become assured tenants, which seems to be what OP might be concerned about.

fair enough, however, OP's 5 posts to date each specifically ask about RAR. The key to RAR is that it can only apply if the accommodation is part of the taxpayer's only or main residence at some time in the basis period..... there can be no rent-a-room relief where the property ceased to be used as the taxpayer's accommodation before the letting began, or commenced to be used as the taxpayer's accommodation after the letting ceased

whether the accommodation remains the OP's main/only home is therefore the question and to that extent I agree if housing law converts it to a tenancy then that would be a problem since RAR would then be impossible - however, what do you mean by "tenancy"? Quite possible to given a tenancy on the bedroom alone, not the whole property, which then remains as shared access to basic facilities. Surely in that case it's an excluded occupier not a tenant and thus still with a resident LL for tax purposes, even if the bedroom is "inaccessible"?

if case law determines that after x months of absence the LL is no longer "resident" and therefore the whole property becomes an AST by default then that would, as you say, totally scupper any chance of RAR.

Be very useful if you can locate the case law!!!

kinger101

booksurr wrote: »

fair enough, however, OP's 5 posts to date each specifically ask about RAR. The key to RAR is that it can only apply if the accommodation is part of the taxpayer's only or main residence at some time in the basis period..... there can be no rent-a-room relief where the property ceased to be used as the taxpayer's accommodation before the letting began, or commenced to be used as the taxpayer's accommodation after the letting ceased

whether the accommodation remains the OP's main/only home is therefore the question and to that extent I agree if housing law converts it to a tenancy then that would be a problem since RAR would then be impossible - however, what do you mean by "tenancy"? Quite possible to given a tenancy on the bedroom alone, not the whole property, which then remains as shared access to basic facilities. Surely in that case it's an excluded occupier not a tenant and thus still with a resident LL for tax purposes, even if the bedroom is "inaccessible"?

if case law determines that after x months of absence the LL is no longer "resident" and therefore the whole property becomes an AST by default then that would, as you say, totally scupper any chance of RAR.

Be very useful if you can locate the case law!!!

I think the tenancy v lodger is a red herring for the reason you alluded to. It is possible for someone to live in the same property as the landlord under a tenancy agreement. Granting exclusive use of a particular room would make it a tenancy, yet if the LL was resident, they'd be able to claim RAR still. Some people are foolish enough to grant

In the absence of case law, I think you'd have to go based on the facts. Indicators that it is still their residence might be that they keep possessions there. And they if suddenly decided to return after 2 weeks (because they're missing baked beans or whatever) then they'd be able to do this without issue. Continuing utility and council tax bills in their name also indicates that they'd be planning to return.

I summary I think they need a bolt and braces approach; not only having the intention to return after 6 months, but making sure that whatever agreement they have does not prohibit them from doing so if the person the let to disagrees at any time before, during or at the end of this period. This is wise both for claiming RAR, and maintaining control of their home.