Going from 2 to 3 lodgers

Cyclonicity

I've currently got 2 lodgers in the house, while living in myself. A third person is looking to move in - officially (as far as I'm aware) this turns it into a HMO which means I'd need to then pay tax on the rent. However, it's only going to be for 2 months.

So questions are:
- Is it worth declaring if it's only for 2 months?
- If I don't declare it and then have to back-pay tax, is there a penalty for not declaring, or just pay the tax?
- When the extra lodger moves out, is it a pain to then re-declare as a non-HMO?
- If I don't fill all of the responsibilities for those 2 months (e.g. don't perform a legionella assessment), how much of an issue actually is that? If the lodgers don't care, will the Government care?
- Are there any big implications on home insurance if it becomes an HMO?

Whatever happens, pretty sure I'd declare it to the home insurance company in case I ever needed to make a claim.

Any advice appreciated!

Cheers

Pixie5740

Rent from lodgers is taxable income regardless of how many lodgers you have. Yes, there might be some reliefs, if you use the Rent a Room scheme for example, but whether you pay tax is to do with the total amount of rent received not the number of lodgers.

It's not a case of it being worthwhile declaring the rental income it's that not declaring it is tax evasion.

Cyclonicity

OK, thanks Pixie - so, provided that I earn less than £7500 in rental income, it would be covered under the Rent A Room Scheme regardless of number of lodgers?

Even though the tax exemption is automatic under the Scheme, do I still need to declare the income then? Would this be on a P60?

Pixie5740

Why would the income from your lodgers show on a P60 issued by your employer?

Yes you can still use the Rent a Room scheme providing you are a resident landlord.

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

G_M

just to add some more links:

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with a resident landlord & shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' & 'same property' (S31 & Schedule 1 (10).

See:

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)