Girlfriend owns flat. Boyfriend moves in. If he pays towards mortgage, is that in effect taxable?

Colin_Buckleberry

Girl A owns flat 100%. 2 bedrooms. Mortgage is circa £1,600 per month. 

Boy A wants to move in. If he pays towards the mortgage, which would appear as a de facto rent payment into Girl A’s bank account each month, is that de facto rental income taxable?

Colin_Buckleberry

(No one else would live in the property)

Keep_pedalling

Tax isn’t the issue, if she allows him to pay towards the mortgage then he will have a legitimate claim to a share in the house if the relationship goes pear shaped. 

She really should just ask him to pay 50% of the household bills (food, utilities, council tax ect.) None of that is taxable.

km1500

yes don't let him.pay towards mortgage unless she wants the boy to be able to claim legal ownership of a share of the property.

user1977

No, it isn't rent.

Ath_Wat

Colin_Buckleberry said:

Girl A owns flat 100%. 2 bedrooms. Mortgage is circa £1,600 per month. 

Boy A wants to move in. If he pays towards the mortgage, which would appear as a de facto rent payment into Girl A’s bank account each month, is that de facto rental income taxable?

Why do people insist on thinking about "paying towards the mortgage" in these situations?  It's like saying "I'll move in and pay off your car loan".

The mortgage is not an amount you pay a month for the privilege of living in the house.  You have already paid for the house. The mortgage is a repayment of debt.  The amount you are paying is completely unconnected to the value of actually living in the house month by month.

SiliconChip

No, but if she is currently claiming the Council Tax single occupancy discount then she'll have to stop doing that.

Colin_Buckleberry

Thanks for the responses. So far my daughter has been told:

— A lawyer can draw up a contract to ensure Boy A has no claim on the property, even if he pays X towards the mortgage / as a de facto rent payment. 

— She’s been advised to draw up this contract as an AST, even though they’ll be sharing a bedroom, but to cap the rent at £625pm (£7,500pa). I presume this is to fulfil the conditions of the tax-exempt ‘Rent A Room’ scheme… even though she’s not renting a room. 

Does any of this change the above advice? And, in response to Keep_pedalling, is there a legal distinction between paying towards the mortgage and having Boy A simply transfer a sum of money into Girl A’s bank account each month?

sourpuss2021

If she doesn’t want it to lead to arguments later, she should be careful never to refer to the payment as being towards the mortgage!  It must only ever be called “rent”.  

Of course if they get married it will be different, but otherwise there’s no point to muddy the waters.  Don’t give him any grounds for thinking he has any claim on the property.

I was just reading a thread written from the perspective of a woman whose partner was refusing to put her on the mortgage, which shows how these things can fester and lead to serious acrimony over time;

Long Term Relationship - Mortgage Issues
http://www.mumsnet.com/Talk/relationships/4680924-long-term-relationship-mortgage-issues

silvercar

user1977 said:

No, it isn't rent.

I agree with you.

It is interesting. Rent out your spare room and you have a tax liability mitigated by the rent a room scheme. Move in a partner and the “rent” is a contribution to costs and tax free.

macman

Colin_Buckleberry said:

Thanks for the responses. So far my daughter has been told:

— A lawyer can draw up a contract to ensure Boy A has no claim on the property, even if he pays X towards the mortgage / as a de facto rent payment. 

— She’s been advised to draw up this contract as an AST, even though they’ll be sharing a bedroom, but to cap the rent at £625pm (£7,500pa). I presume this is to fulfil the conditions of the tax-exempt ‘Rent A Room’ scheme… even though she’s not renting a room. 

Does any of this change the above advice? And, in response to Keep_pedalling, is there a legal distinction between paying towards the mortgage and having Boy A simply transfer a sum of money into Girl A’s bank account each month?

An AST is a tenancy. You can't create a tenancy where the LL is living in the same property, whether they are sharing a bed or not.
The boyfriend is a lodger if paying rent, or a resident guest if not.