Being a self-employed lodger? Will it affect capital gains tax for landlords?

tutorgirl

I recently moved into a house as a lodger, just before the coronavirus crisis hit. I was an employee, never doing any work from home. However, I have taken unpaid leave for health reasons. I'm vulnerable to covid-19 but not so vulnerable that my employer was willing to give paid leave.

However, I'm well-educated and believe I could provide a good service as an online academic tutor, i.e. providing 1:1 private tutoring via webcam or other platform. I would be doing this from the desk in my bedroom. There is no room in the house that I would be using purely for business purposes.

Will this affect my landlords' (a married couple co-owning the home) Capital Gains Tax, should they decide to sell the home in the future? Will this affect their Rent-a-Room allowance?

Comms69

No and no. 

I cannot speak to the necessary registration to carry out the work you wish to do.

SuperHan

No.

Extended for character count. 

tutorgirl

"The rent-a-room scheme applies to ordinary lettings of living accommodation in the taxpayer’s own home. It does not apply to rooms let as an office or for other business purposes, see PIM4002. But the scheme applies to genuine lodgers who study at home or who do some of their business work at home in the evenings or at weekends."

This is a quote from the rent-a-room scheme from the HMRC documentation.

It sounds like, based on this, me being self-employed at home may affect the rent-a-room tax allowance, unless I'm interpreting it wrong. But I have no idea about Capital Gains Tax

FreeBear

tutorgirl said: It sounds like, based on this, me being self-employed at home may affect the rent-a-room tax allowance, unless I'm interpreting it wrong. But I have no idea about Capital Gains Tax

It might also impact on council tax liability depending on the nature of the work and how much of the property is set aside for business use - One of the reasons I have declined self employed lodgers who "work from home".

But I would recommend the home owners seek a tax consultant for a professional opinion.

Comms69

tutorgirl said:

"The rent-a-room scheme applies to ordinary lettings of living accommodation in the taxpayer’s own home. It does not apply to rooms let as an office or for other business purposes, see PIM4002. But the scheme applies to genuine lodgers who study at home or who do some of their business work at home in the evenings or at weekends."

This is a quote from the rent-a-room scheme from the HMRC documentation.

It sounds like, based on this, me being self-employed at home may affect the rent-a-room tax allowance, unless I'm interpreting it wrong. But I have no idea about Capital Gains Tax

You know quite often people hear what they dont want to on these forums and argue. It's rare to get someone who gets what they want to hear and still argue. The answer remains no. (it also has absolutely no impact on you if it was yes, which isn't)

theartfullodger

re your question #### Will this affect my landlords' (a married couple co-owning the home) Capital Gains Tax, should they decide to sell the home in the future?#####

Who can say? That will depend on CGT rules in the future (when they sell - not the rules as of now..)  which may well be - well the definitely will be - different from those of today.).

After Covid19 there WILL be tax increases (someone's got to pay for the current government massive discovery of the for-so-long-denied existence money tree.)

There's nothing to stop a chancellor deciding to tax gains where there have been lodgers..

But probably/hopefully not.

oldbikebloke

tutorgirl said:

"The rent-a-room scheme applies to ordinary lettings of living accommodation in the taxpayer’s own home. It does not apply to rooms let as an office or for other business purposes, see PIM4002. But the scheme applies to genuine lodgers who study at home or who do some of their business work at home in the evenings or at weekends."

This is a quote from the rent-a-room scheme from the HMRC documentation.

It sounds like, based on this, me being self-employed at home may affect the rent-a-room tax allowance, unless I'm interpreting it wrong. But I have no idea about Capital Gains Tax

the answers remain No and NO
PIM4002 is aimed at the scenario where a resident landlord lets a room which is used by someone who does not also LIVE IN the property.
The rent a room allowance is to allow resident landlords to have lodgers - lodgers use the room as their main residence, they do not use the room purely for business purposes, ie they are not renting a "cheap" office. 

In your case how many hours work you do from your room is irrelevant, it is your main residence and therefore your landlord can use RaR as you are their lodger.

Your status as self employed has no bearing whatsoever on your landlords CGT position - under, as artful reminds us above, the current rules since you appear to be the only lodger paying them rent and therefore are completed ignored for their CGT position. (If they get a second lodger the position changes, but that is their problem, not yours) 

paddyz

Has the owners said they are not keen on having you working from home and given the CGT as a reason?

I have lodgers and one working from home due to the virus and haven’t heard of this 

Comms69

paddyz said:

Has the owners said they are not keen on having you working from home and given the CGT as a reason?

I have lodgers and one working from home due to the virus and haven’t heard of this 

Thats because as it currently stands there is no implication for CGT

paddyz

FreeBear said:

tutorgirl said: It sounds like, based on this, me being self-employed at home may affect the rent-a-room tax allowance, unless I'm interpreting it wrong. But I have no idea about Capital Gains Tax

It might also impact on council tax liability depending on the nature of the work and how much of the property is set aside for business use - One of the reasons I have declined self employed lodgers who "work from home".

But I would recommend the home owners seek a tax consultant for a professional opinion.

I once had a work from home lodger that was a dog walker, he proposed to have dogs in the house and bath them during daytime, I didn’t fancy that very much