Is help with bills classed as income and therefore taxable?

Daveinlincoln

Hi all, I hope you are all well.

I currently have a friend living with me, I don't charge them any rent but I do ask them to make a monthly contribution to the utility bills as I have to have them on the council tax bill etc.

They transfer £250 a month into my account and I was wondering if HMRC would see this as income if they decided to have a look at my bank account?

Any answers appreciated.

Dazed_and_C0nfused

Yes it probably would be taxable income however it would be covered by the rent a room rules meaning there's nothing for you to declare (assuming the amount stays within the limits).

https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2022

Daveinlincoln

Thankd Dazed_and_C0nfused.....that is a surprise, i was expect that it wouldn't count as rent and wouldn't be looked upon as income as they are literally only paying for the utilities that they use, i'm not making money from it. 

pjread

yeah they're not though are they, what they're literally doing is transferring a recurring fixed sum to you as a condition of living there...  I imagine that's how HMRC would view it anyhow. 

The rent a room scheme probably means there's no tax due as Dazed_and_C0nfused says, but I think it'd be difficult to successfully argue it wasn't income.

Malthusian

Daveinlincoln said:

Thankd Dazed_and_C0nfused.....that is a surprise, i was expect that it wouldn't count as rent and wouldn't be looked upon as income as they are literally only paying for the utilities that they use, i'm not making money from it. 

They use exactly £250 a month worth of electricity and water month in, month out? It's rent.

If you were letting a whole property to them, then either they would pay the utility billls themselves (in which case it would be nothing to do with your tax affairs) or they would pay you as part of their rent (in which case you would pay tax on the income but could deduct the cost of the utilities as a business expense).

One of the benefits of the Rent a Room scheme is that you don't have to worry about that kind of stuff; if your gross rent is below a certain threshold the Government won't bother to tax you on it.

Daveinlincoln

Malthusian said:

Daveinlincoln said:

Thankd Dazed_and_C0nfused.....that is a surprise, i was expect that it wouldn't count as rent and wouldn't be looked upon as income as they are literally only paying for the utilities that they use, i'm not making money from it. 

They use exactly £250 a month worth of electricity and water month in, month out? It's rent.

If you were letting a whole property to them, then either they would pay the utility billls themselves (in which case it would be nothing to do with your tax affairs) or they would pay you as part of their rent (in which case you would pay tax on the income but could deduct the cost of the utilities as a business expense).

One of the benefits of the Rent a Room scheme is that you don't have to worry about that kind of stuff; if your gross rent is below a certain threshold the Government won't bother to tax you on it.

I appreciate the reply, thanks.
I just had a quick look on the HMRC website about the Rent a Room scheme and it said this:
"The tax exemption is automatic if you earn less than £7,500. This means you do not need to do anything."

So thats perfect for me, i don't need to apply to join the scheme or even declare anything.