Rent a room scheme and not including bills

tearfulheart

If on the rent a room scheme, the tax free amount is £7500 or £625 a month. If this is the rental amount without utility bills included, and utility bills are paid to the landlord separately, would the utility bill payment still count as income?

anselld

Yes, RaR allowance includes bills.

Comms69

tearfulheart wrote: »

If on the rent a room scheme, the tax free amount is £7500 or £625 a month. If this is the rental amount without utility bills included, and utility bills are paid to the landlord separately, would the utility bill payment still count as income?

Yes- also £625 a month for a room is plenty and you should include bills...

saajan_12

tearfulheart wrote: »

If on the rent a room scheme, the tax free amount is £7500 or £625 a month. If this is the rental amount without utility bills included, and utility bills are paid to the landlord separately, would the utility bill payment still count as income?

Yes, the £7500 per year is to cover all payments the LL receives. The idea is to make it easier for people with larger properties than they need, to make better use of spare rooms by getting a tax free allowance and not have to worry about receipts, recording expenses etc. For many people the £7500 will be more than the total rent they receive, but you can think of it as instead of deducting expenses (eg utility bills) they can deduct upto £7500. You can't then deduct expenses on top.

Comms69 wrote: »

Yes- also £625 a month for a room is plenty and you should include bills...

Plenty for.. a box room in a busy family house in a remote area? .. half a modern 2 bed 2 bath flat in central London? Theres a broad range of market rent across the country, why should a live in landlord consider half this as 'plenty'? A two bed, two bed flat with concierge, gym & pool would be ~£3200 per month, often taken by two sharers contributing £1600 each. I'd easily expect to pay £1500+ for a room with ensuite to a live in LL, yes that's PLUS bills. I'd be laughed out of the viewing if I offered £625 claiming that should be 'plenty'.

How bills are charged is upto the landlord and lodger.. some may want to reduce their outgoing if they don't expect to use energy as much as the 'average' assumed by an all in rent. The LL still has to pay tax on any income they receive over £625, but doesn't mean the 'should' include bills.

Wanderingpomm

saajan_12 wrote: »

Yes, the £7500 per year is to cover all payments the LL receives. The idea is to make it easier for people with larger properties than they need, to make better use of spare rooms by getting a tax free allowance and not have to worry about receipts, recording expenses etc. For many people the £7500 will be more than the total rent they receive, but you can think of it as instead of deducting expenses (eg utility bills) they can deduct upto £7500. You can't then deduct expenses on top.



Plenty for.. a box room in a busy family house in a remote area? .. half a modern 2 bed 2 bath flat in central London? Theres a broad range of market rent across the country, why should a live in landlord consider half this as 'plenty'? A two bed, two bed flat with concierge, gym & pool would be ~£3200 per month, often taken by two sharers contributing £1600 each. I'd easily expect to pay £1500+ for a room with ensuite to a live in LL, yes that's PLUS bills. I'd be laughed out of the viewing if I offered £625 claiming that should be 'plenty'.

How bills are charged is upto the landlord and lodger.. some may want to reduce their outgoing if they don't expect to use energy as much as the 'average' assumed by an all in rent. The LL still has to pay tax on any income they receive over £625, but doesn't mean the 'should' include bills.

If you are charging that much you need to fill
In a tax return

Pixie5740

saajan_12 wrote: »

Plenty for.. a box room in a busy family house in a remote area? .. half a modern 2 bed 2 bath flat in central London? Theres a broad range of market rent across the country, why should a live in landlord consider half this as 'plenty'? A two bed, two bed flat with concierge, gym & pool would be ~£3200 per month, often taken by two sharers contributing £1600 each. I'd easily expect to pay £1500+ for a room with ensuite to a live in LL, yes that's PLUS bills. I'd be laughed out of the viewing if I offered £625 claiming that should be 'plenty'.

Would you really expect to pay almost the same as a lodger as you would as a tenant with full AST rights? I agree that £625 all-in for a room in certain parts of the country is low but I would expect to pay a lot less as a lodger than I would as a tenant.

saajan_12

Wanderingpomm wrote: »

If you are charging that much you need to fill
In a tax return

Yes, ofcourse. Doesn't mean you can't charge it and bills.

Pixie5740 wrote: »

Would you really expect to pay almost the same as a lodger as you would as a tenant with full AST rights? I agree that £625 all-in for a room in certain parts of the country is low but I would expect to pay a lot less as a lodger than I would as a tenant.

I agree, which is why I suggested £1500. As a lodger you don't have letting agent fees (which can add an eye watering £500+) , council tax, long minimum tenancies etc so for this particular market, where flexibility is probably more valued as it targets young professionals rather than families, I don't think the differential is massive.

Hoploz

How would you separate utility bills? If you're renting a room in your home, surely the gas bill would remain the same and the electric wouldn't be much different assuming they aren't running a drug factory in the corner.

That's the reason bills are included - they are not usually calculable

FreeBear

Hoploz wrote: »

How would you separate utility bills? If you're renting a room in your home, surely the gas bill would remain the same and the electric wouldn't be much different assuming they aren't running a drug factory in the corner.

That's the reason bills are included - they are not usually calculable

For an existing occupier, they would know roughly how much the bills are each month. Based on personal experience, gas & electricity usage is up by around 30%, and water has doubled. Come the winter, I would anticipate gas consumption to be double what it was last year.

The rent I charge under the RaR scheme is inclusive of all bills (except telephone), and set at a level that hopefully covers the lodgers energy usage throughout the year. If it doesn't. I've included a "subject to fair usage" clause in the contract.