Capital gains tax on having lodgers

collectors

Hi, could anyone say what sort of CG/Tax i may have to pay at a later date renting rooms to lodgers in the home i live in? I am single & have a personal tax allowance of approximately £11.5K + a lodgers tax allowance of £7.5K = £19K before i pay tax. My income from renting rooms is about £18K "if lucky". Now if i rent & sell in 10 years, this will give me an extra income of £180K, but what CG/tax may those useless & despicable tax office officials want to squeeze out of me??.
Now i realise things may change, but as of today's tax laws

Thanks

foxy-stoat

I think you are confusing CGT with income tax.

You should register with HMRC and complete annual self assessments on the additional income.

collectors

No, it is capital gains as i am making another gain from my property.
I was shocked when told. But it's right.
And yes i put in a return each year as the tax man gives me an extra £7.5K in relief.

BoGoF

Some of the advice you get on this site is likely to come from current or ex 'tax office officials'. But seeing as you see them as useless and despicable then you surely don't want their advice?

p00hsticks

collectors wrote: »

No, it is capital gains as i am making another gain from my property.
I was shocked when told. But it's right.

Well, whoever told you obviously know better than the people on this board so perhaps you should go back and ask them for more detail...

JGB1955

But you’re not making a capital gain from your lodgers.... are you?

ToasterScheme

JGB1955 wrote: »

But you’re not making a capital gain from your lodgers.... are you?

^^This.

In 10 years time, the property will not have gone up in value BECAUSE you had lodgers in it. [It might do anyway, but only in the same way as it would do if you lived in it yourself]

Unless maybe you're planning to sell it with the lodgers installed in some way?

You pay income tax on lodger income. It's "Income from property" yes, so a different page on the self-assessment form - but never capital gains.

collectors

I am starting to find links to this CG problem, even on this forum.
https://forums.moneysavingexpert.com/discussion/5029865/capital-gain-tax-because-of-lodgers
PS: ToasterScheme, i do live in the same house.

rae500

Hi - long time lurker...

I think the OP may be referring to the rules hinted at on the Gov.uk website on the rent a room scheme which states:

"You may have to pay capital gains tax when you sell your home if:
- you let all out or part of it
-you've taken in more than 1 tenant or lodger at a time"

( www. gov.uk/rent-room-in-your-home/rent-bills-and-tax )

The page then links to another which suggests that if you only let out part of your home, you'll need to work out the proportion of your home you lived in. There doesn't seem to be any further guidance on gov.uk on how to do this though.

greenbee

I had this problem when I sold a house about 20 years ago. Interestingly, my accountant gave me very high figures, but when I talked it through with the tax office they gave me help with the calculations based on the percentage of the house occupied by lodgers over time (it had varied) and I ended up paying no CGT as we'd gradually reduced the number of lodgers and prior to selling I'd lived there on my own for long enough that it wasn't a problem.

collectors

rae500 wrote: »

Hi - long time lurker...

I think the OP may be referring to the rules hinted at on the Gov.uk website on the rent a room scheme which states:

"You may have to pay capital gains tax when you sell your home if:
- you let all out or part of it
-you've taken in more than 1 tenant or lodger at a time"

( www. gov.uk/rent-room-in-your-home/rent-bills-and-tax )

The page then links to another which suggests that if you only let out part of your home, you'll need to work out the proportion of your home you lived in. There doesn't seem to be any further guidance on gov.uk on how to do this though.

Spot on rae500, & this is my problem. At this point in time, i am trying to cover myself for any future eventuality & avoid giving to any tax person that doesn't posses a birth certificate any of my hard earned money that i don't have to.