Take in a lodger... official MoneySavingExpert.com discussion

Matt_Hutchinson

492800 wrote: »

I am planning to rent out a spare room, it's central london, where I can charge £8400 a year (£700 a month) for my spare room.

Since this is £4150 over the allowance, I presume I would only pay TAX on the excess.
And I would NOT pay TAX on the whole amount?

Am I correct in thinking that if I do charge £8400 a year, I would pay £1660 in tax.
(btw, I Pay 40% Tax)

Therefore pocketing £6740.

Is this correct?

Hi

You'll only pay tax on the amount you earn over the £4,250 Rent a Room figure. What tax you pay on that amount depends on all your other earnings - it could be (although unlikely) that the rent you earn pushes your income into the next tax bracket up from the one you're in.

Cheers

Matt

492800

Thank you Matt.

Would you or anyone also know if the "rent a room" scheme is the best way regarding TAX? or are there any other options to make the TAX bill "lighter" :-)

LyndaP

I have students stay and earn over £4250. I understand that I will need to pay tax on it but can I claim 10% for wear and tear. It looks like it from my tax return.
thanks.

Matt_Hutchinson

If you use the Rent a Room Scheme you can't claim anything for wear and tear. To do that you'll need to declare the income separately as income from lettings. You'll be able to claim for expenses etc if that's the case.

Most people don't do this for the income they earn from taking in lodgers as it's usually simpler just to declare the amount over the threshold and be taxed on it. It also makes the tax return simpler (you're just declaring the extra income, not listing expenses and so on).


Matt

Angel_Rachie

hi I am currently on ESA and live in a privately rented house. Just wondering if I need to inform my landlord if I get a lodger and if it would effect my benefits? TIA

seabright

Angel_Rachie wrote: »

hi I am currently on ESA and live in a privately rented house. Just wondering if I need to inform my landlord if I get a lodger and if it would effect my benefits? TIA

What does your tenancy agreement say? Check that first. I don't know what ESA is, but I would check with the CAB regarding benefits

echo23_2

Hi

Would be grateful for any advice from others on an issue i have encountered with local Council.

Despite what I've read re entitlement on various rent a room guidance websites, my local council is refusing to allow me to retain my 25% single occupancy council tax discount even though I will only be letting room to a Mon to Fri lodger who works locally but who will be paying own full council tax on his family home which he returns to at weekends.

Can they do this? Aren't all councils consistent in allowing this and can I appeal this with Valuation Tribunal?

Any advice appreciated.
Thanks

March2012

for council tax? thanks for any input as i did not think at the beginning that it might actually cost us more to have someone in. thanks for any help!

19lottie82

For a lodger, your weekly / monthly rate should incorporate all bills anyway.

But in regards to the lodger costing you more in council tax, if you are by yourself just now and get a single persons discount of 25%, if someone else moves in you will lose that (unless the lodger has another "main" address, where they pay CT and is just using your place as digs for work ). Maybe something to think about.

shellstar

Hello,

Can anybody recommend a lodger agreement template at all? I've been considering renting out my spare room. A friend of a friend has expressed some interest and suggested we have a lodger agreement, which seems sensible. I'm aware that lodgers have less rights than tenants but it seems fair to set out the terms of use, rent to be paid etc.

Many thanks
Shelley