second home, lodgers and ownership position

davidmcn

booksurr wrote: »

I would question your assertion that wider case law is not informative of the position. There is extensive (tax related) case law clarifying certain aspects of how people "use" more than one property and therefore which one of them is the "main" property

Yes, that's what I meant - she'd need to determine that as a matter of fact it was her main residence, but (unlike some tax questions) she's not precluded from doing that merely because her spouse lives elsewhere.

Katgrit

Hi.
I work in healthcare, please disgredard where you're registered with a GP for this decision. Joining a GPs practice has nothing to do with tax, primary residence, second home, etc. As long as you "live" in an area you can register where you want. There is no official rules regarding this and so to "live" in an area generally means where you sleep at night, eat your tea, watch telly, work. It doesn't have anything to do with where is your "primary" residence. Assuming most access to your GP and healthcare is traditionally needed Mon-Fri it sense to register where you are on those days.

I've had a situation where we were sending urgent letters to a patient who wasn't picking them up, being really odd on the phone when I asked him did we have the right address. It boiled down to me having to really get down to the nitty gritty of "Look, when you go home at night, and unlock your front door, and settle down to watch telly, give us THAT adress. That's where you live. We want to make sure you're getting these letters.". Had to reassure him that it wouldn't affects his benefits, tax etc. He was obviously on the fiddle in some way, but all we wanted was to make sure he got his urgent appointment letters. Don't overcomplicate things, Just register with a GP in the place it makes sense too.

guapagirl

Thank you for all your responses, it's been really helpful.

unforeseen wrote: »

If you declare the fat as the principal residence it sorts the lodger problem. Hubby would then be living in the secondary residence.

Shouldn't be a problem, http://www.lawpack.co.uk/tax/property-tax/articles/article7648.asp

Rather stupidly we hadn't thought of that - too used to thinking of home as 'home'. I suspect there might be CGT implication if we end up deciding to sell if we ever manage to get permanent work, but it could work in the short term, thank you.

booksurr wrote: »

for the purposes of tax a married couple can only have one main residence between them. That means the flat would not be classed as your main residence for income tax purposes, so you could not claim the rent a room allowance, the "lodger's" rent would be taxed under the normal method, ie income - expenses = taxable profit.

the tax liability will fall on whoever is entitled to a share of the income. For a married couple that must in all cases reflect the underlying ownership. If you both own then the income tax liability is split between you 50/50 if joint owners or some other fraction if you are tenants in common. If only one owns then that is the person who is liable for the income tax on the rent.

Whether you decide husband will be the sole owner or whether you jointly own makes no difference for Stamp Duty (it will be the higher rate as married couples are one "unit" whether they split ownership or not) and for capital gains tax as it will not be the main residence under tax law.

for council tax purposes you cannot claim the single person discount for obvious reasons a) there will be more than one person resident! and b) it will not be your sole/main residence..

for the purposes of GP's etc the tax related definition of main residence is irrelevant. If you split your time between 2 places then you are perfectly entitled to register in the area of your choice. The restriction is you cannot register in both places simultaneously. As you will be genuinely residing in both places you can go on the electoral roll at both places should you wish (but can only vote once!)

Thank you for your comprehensive response.

We aren't trying to avoid stamp duty, though it would be preferable if money from a lodger was not taxed either under the rent a room system or if my husband was the landlord. It looks like the best solution is to make the flat the main residence.

Katgrit wrote: »

Hi.
I work in healthcare, please disgredard where you're registered with a GP for this decision. Joining a GPs practice has nothing to do with tax, primary residence, second home, etc. As long as you "live" in an area you can register where you want. There is no official rules regarding this and so to "live" in an area generally means where you sleep at night, eat your tea, watch telly, work. It doesn't have anything to do with where is your "primary" residence. Assuming most access to your GP and healthcare is traditionally needed Mon-Fri it sense to register where you are on those days.

Well I actually tried to register in the area where I work and they wanted proof of residency and I was explicitly told that because I was renting a room as lodger and thus had no bills to show my address, that meant they wouldn't register me. Demonstrating that I had a full time contract in the big building down the road was not enough. They wanted 'official' documents with my address on it. I never had to do this before but I'm wondering if it is part of the drive to exclude illegal migrants from public services.

booksurr

guapagirl wrote: »

Rather stupidly we hadn't thought of that - too used to thinking of home as 'home'. I suspect there might be CGT implication if we end up deciding to sell if we ever manage to get permanent work, but it could work in the short term, thank you.

We aren't trying to avoid stamp duty, though it would be preferable if money from a lodger was not taxed either under the rent a room system or if my husband was the landlord. It looks like the best solution is to make the flat the main residence..

If you "make an election" to record the flat as your the main home then it becomes the main home (for tax purposes) of both of you since you are married and are therefore one "unit" not 2 individuals. By definition therefore your current home is no longer exempt from CGT and you would be liable for CGT when you sell that home. Of course there is a huge difference between being liable and actually having anything to pay. Assuming you both own the current home, then you will have (at current rates) £22,200 of CGT gain allowance so some leeway before you'd end up having to pay CGT. Choosing which property to nominate as main home for tax purposes is down to balancing off which is most likely to be sold first and which is most likely to have the biggest gain before the first sale. Also bear in mind that if you let the entire property in the future (not just have a lodger) it cannot remain as a nominated main home.

However, as tax is complex (!) as husband would not be resident there himself if he receives and rental income he cannot claim it under the rent a room allowance since it is not his "residence" in that context. Also note that for him to receive any of the rent at all he must be an owner of the property, otherwise the full tax liability remains with you if you are the sole owner. If you are both owners, then you will need to do so as tenants in common with a split share that favours him if you want him to receive most of the rent. In that case you will need to register a Form 17 with HMRC reflecting the underlying ownership shares otherwise a default 50/50 split will automatically be used by HMRC
https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

guapagirl wrote: »

Well I actually tried to register in the area where I work and they wanted proof of residency and I was explicitly told that because I was renting a room as lodger and thus had no bills to show my address, that meant they wouldn't register me. Demonstrating that I had a full time contract in the big building down the road was not enough. They wanted 'official' documents with my address on it. I never had to do this before but I'm wondering if it is part of the drive to exclude illegal migrants from public services.

i can see that if you admitted the lodging was Mon - Fri then the GP would regard you as having a main home elsewhere, but merely being a lodger and therefore not having utility bills in your own name cannot ever be a reason to refuse your GP registration. My lodger is registered with my GP and obviously does not have bills in his name, but the difference is this is my lodger's only home

westv

http://www.nhs.uk/NHSEngland/AboutNHSservices/doctors/Pages/NHSGPs.aspx

Some GP practices may ask for proof of identity when you register, especially when you register children in your care. Your ID will also ensure you are matched with your details on the NHS central patient registry and that your previous medical notes are passed onto the new practice. However, registration and appointments should not be withheld from you on the basis that you don’t have the necessary proof of address or personal identification at hand. It is not considered a reasonable ground to refuse registration.

guapagirl

Thank you for that booksurr, that makes a lot of sense. The CGT on our own home would be substantial (it was near derelict hence cheap, we were lucky, did all the work ourselves and the place we live has become spectacularly popular to the point we couldn't even dream of buying here in the future) so it is best to keep this as our main residence. We'll get the shares shifted so they are in his favour.

westv, thanks for that as well. I'll try and get registered when i get back up country for work next week.

AdrianC

guapagirl wrote: »

Well I actually tried to register in the area where I work and they wanted proof of residency and I was explicitly told that because I was renting a room as lodger and thus had no bills to show my address, that meant they wouldn't register me. Demonstrating that I had a full time contract in the big building down the road was not enough. They wanted 'official' documents with my address on it. I never had to do this before but I'm wondering if it is part of the drive to exclude illegal migrants from public services.

Do you have a tenancy agreement? Will your landlord provide you with some documentation? Can you get something like a library card, and start from there?

vqmismatch

Depending on the amount you would be spending on stamp duty a quick and amicable divorce may make sense...

guapagirl

vqmismatch wrote: »

Depending on the amount you would be spending on stamp duty a quick and amicable divorce may make sense...

dude, I'm punching way above my weight as it is, I'd be a fool to even give him the smallest chance of escape :rotfl: