Rent a room relief - multiple rooms?

northcave

Hello!

I have a 4 bed house. If I rent 3 bedrooms rooms out will I still be applicable for the £7500 rent room relief?

The total income will exceed the £7500 and I appreciate I'll have to pay tax in the additional amount but can I still rent 3 bedrooms and keep one myself and still be applicable?

Thanks!

TheGardener

Colleague of mine is thinking of doing the same thing (she wants to let 2) and like you found it hard to get an answer on how many rooms are allowed. However, it seems you can let out more than one room. The key thing for the eligibility is that its your home and you live there. Of course as you say - only the first £7.5k is covered by the scheme. There is detailed guidance on the .gov website.

anselld

There is no limit on the number of rooms for RaR. As stated above the only requirement is that you live there and pay tax on all income above the £7500.

Note also that three lodgers makes your home an HMO ( House in Multiple Occupation). You will be required to comply with the HMO Management Regulations and with any local HMO Licensing requirements. You will need to inform your Insurers that you are running an HMO. Your home will also be subject in part to Capital Gains Tax as you cannot claim full Private Residence Relief for the duration of running a HMO.

G_M

The HMRC manual states:

What income does it apply to?

The scheme applies to income from providing furnished accommodation (or from providing goods and services in connection with that accommodation) in the individual’s only or main residence. This obviously covers income from lodgers. It may also be applied to bed and breakfast or guest house businesses (assessable as trading income) provided that:

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001

For the most part the manual refers to the singular ('a lodger') but as you can see above, the plural is also included. Nowhere does the manual specify a maximum limit to this.

00ec25

Income Tax
the rent a room allowance is the monetary amount £7,500. It is not based on the number of rooms let, it is simply the total income received from anyone who pays you whilst living with you as a lodger in your own home.

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

"2. The Rent a Room Scheme
The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

You can let out as much of your home as you want."

bear in mind total income means anything they pay you for, it is not just "rent". If you charge them for a share of bills that forms part of the income total


capital Gains tax
There is one area of tax law where the number of lodgers (plural) you have does matter. If you have more than one lodger you become liable to Capital Gains Tax.
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64702

you will have to calculate CGT when/if you sell the property and it will be based on the % of the property which you let. there is no proscribed method for that calculation, but a typical example would be room count, so 4 bedrooms, lounge & kitchen (bathrooms are ignored) = 6 rooms. You let 3 so 3/6 ie 50% of the gain in value of the property would be taxable when you sell it. There is more than that to the calculation, so when you reach that point best to learn about its details then, but in the meantime bear in mind more than one lodger = CGT liability..

45002

northcave wrote:

Hello!

I have a 4 bed house. If I rent 3 bedrooms rooms out will I still be applicable for the £7500 rent room relief?

The total income will exceed the £7500 and I appreciate I'll have to pay tax in the additional amount but can I still rent 3 bedrooms and keep one myself and still be applicable?

Thanks!

For reference

http://www.landlordzone.co.uk/forums/showthread.php?79335-Rent-a-room-relieft-multiple-rooms

northcave

Thanks all.

The guidance says I have to be living there. I travel a lot for pleasure and work and by business is in another part of the country. Is there any specific minimum requirement of the amount of time I need to be at the property?

00ec25

northcave wrote: »

Thanks all.

The guidance says I have to be living there. I travel a lot for pleasure and work and by business is in another part of the country. Is there any specific minimum requirement of the amount of time I need to be at the property?

it is not predicated by such a simple measure of time

to qualify as a resident landlord, and thus eligible to claim RAR, the property must be your main home

there is no single definition of "main" or "home", it is instead a series of subjective questions which are based on extensive case law as each attempt by taxpayers to bend the rules has been challenged by HMRC in court and a legal judgement given in "clarification". The key principles established relate to capital gains tax, but are applied to RAR as well, and can be summarised as the 3 key measures used in law: "degree of permanence, continuity or expectation of continuity" (of occupation)

in no particular order, nor as an exhaustive list, the following are example questions that have been examined in court cases:

1. do you own another property anywhere else (UK or abroad)?
2. when on business elsewhere where do you stay: hotel? second home you own? property you rent elsewhere? friends house?
3. (mobile phones notwithstanding) would your friends and social contacts ordinarily try to get hold of you at "home" as that is where they would expect you to be
4. where does the wife live?
5. where do the kids go to school?
6. where is your post addressed to?
7. where are you registered to vote?
8. what address would you state if asked (eg used for car insurance purposes)?
9. where do you return to at the end of the day?
10. where do you commute to/from?
11. where is your social life based around
and....
12. how long do you spend there....

if you can show that it is the only "home" you own then it does not matter that you spend 364 days of the year working 12 on 12 off per day on an oil rig in the middle of the sea, it is your home and you have lodger(s).

Mojisola

northcave wrote: »

The guidance says I have to be living there. I travel a lot for pleasure and work and by business is in another part of the country. Is there any specific minimum requirement of the amount of time I need to be at the property?

It's worth being at the property regularly enough so that the lodgers don't start to feel like tenants and run your house as they want and become unhappy when you come home and disrupt their routines or telling them you don't like things they are doing.