We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Lodger, maximizing the money they can give us without having to do taxes
needabed
Posts: 91 Forumite
We are a couple renting out a room to a lodger. Tax site says lodger can pay us up to £7500 without us having to inform the taxman. We could possibly rent out another room, but is there any legal way to avoid going over the limit?
Could the lodger(s) do any or all of these?
Gift us £3,000 or gift us £3,000 each
Pay all utilities
Pay all food shops
Pay for our petrol/public transport
Pay to have new kitchen, bathroom, decorating etc?
Could the lodger(s) do any or all of these?
Gift us £3,000 or gift us £3,000 each
Pay all utilities
Pay all food shops
Pay for our petrol/public transport
Pay to have new kitchen, bathroom, decorating etc?
0
Comments
-
re the gift - yes by all means if you fancy doing some jail time0
-
We are a couple renting out a room to a lodger. Tax site says lodger can pay us up to £7500 without us having to inform the taxman. We could possibly rent out another room, but is there any legal way to avoid going over the limit? no
Could the lodger(s) do any or all of these?
Gift us £3,000 or gift us £3,000 each - No
Pay all utilities- No
Pay all food shops- No
Pay for our petrol/public transport- No
Pay to have new kitchen, bathroom, decorating etc?- No
Why not just pay what you owe in tax?0 -
I'm pretty certain that disguising a payment for their lodgings as a gift would be considered obvious tax evasion.
The Rent a Room scheme, which allows you to get that tax-free allowance, is quite clear that the £7500 is rental income before expenses, including any amounts you receive for goods and services. So regardless of whether the lodger was paying all the bill or just a contribution towards their usage, that is included.
Rent a Room scheme guidance - in particular take a look at the example under 3.3.0 -
We are a couple renting out a room to a lodger. Tax site says lodger can pay us up to £7500 without us having to inform the taxman. We could possibly rent out another room, but is there any legal way to avoid going over the limit?
Could the lodger(s) do any or all of these?
Gift us £3,000 or gift us £3,000 each
Pay all utilities
Pay all food shops
Pay for our petrol/public transport
Pay to have new kitchen, bathroom, decorating etc?
No. That would be tax evasion. Jail time is unlikely if you are caught; HMRC prefers to collect the tax due plus interest and penalties.
Bear in mind that if you ever fall out with the lodger, they might be inclined to grass you up.:)0 -
I read on another site that it's £3,750 per owner. So if our 2 kids who are 18/19 were on the deeds? Need to do that in any case to lower the inheritance tax...0
-
Even if that was true you'd be no better off as you wouldn't be recieving the extra rent, your children would.
This would then exclude them from any FTB incentives available as well as likely leave them open to CGT. Also if you think that gifting a share in property to avoid IHT is a viable option then you are very much mistaken.
Just pay the tax due, it will be cheaper and easier all round.0 -
I read on another site that it's £3,750 per owner. So if our 2 kids who are 18/19 were on the deeds? Need to do that in any case to lower the inheritance tax...
It won't "lower the inheritance tax".
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm040710 -
We are a couple renting out a room to a lodger. Tax site says lodger can pay us up to £7500 without us having to inform the taxman. We could possibly rent out another room, but is there any legal way to avoid going over the limit?
Could the lodger(s) do any or all of these?
Gift us £3,000 or gift us £3,000 each
Pay all utilities
Pay all food shops
Pay for our petrol/public transport
Pay to have new kitchen, bathroom, decorating etc?
Who is this taxman of whom you speak? Do you mean HMRC? Why would a lodger give you a gift or pay to install a new bathroom in your home? Everything you are proposing whiffs of tax evasion except adding your children to the deeds which sounds like a way of maximising tax.0 -
this seems extreme to avoid paying tax due - they will both be liable for extra stamp duty when they purchase their own properties which will be more than the tax due surelySo if our 2 kids who are 18/19 were on the deeds?
If you are so against paying tax, reduce the lodgers rent to below the maximum allowed0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.5K Banking & Borrowing
- 253.7K Reduce Debt & Boost Income
- 454.4K Spending & Discounts
- 245.5K Work, Benefits & Business
- 601.4K Mortgages, Homes & Bills
- 177.6K Life & Family
- 259.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards