Rent-a-Room question

Gycraig

jimbo_89 said:

_Penny_Dreadful said:

jimbo_89 said:

MobileSaver said:

jimbo_89 said:

zagubov said:

You may be misunderstanding the different ways people can share accommodation with homeowners. A friend (or more likely a stranger) can be a lodger. If they pay up to the threshold but not a penny more, I'm not sure you even have to tell HMRC.

If you formally accept money from them at a rate much higher than their bills would require then that might be interpretable as assisting with mortgage payments.

My main question was about whether I could use the Rent a Room scheme and the tax allowance it offers for my case. It is now obvious to me this is not so straightforward as the RaR applies to lodgers.

Your partner will be paying half the bills so it's nothing to do with Rent a Room or tax allowances; it's not income for you, it's your partner paying their share of everyday bills (excluding any mortgage) so there's no tax implications whatsoever.

If things go pear-shaped in the future then what matters are the facts of who paid what; if your partner is contributing to the mortgage or home improvements on top of half the everyday bills like food, electric, heating etc. then they may well be able to make a claim against the property even if you have written agreements in place.

I don't mind if you want to call it rent, additional contribution or whatever. There surely must be some sort of legal mechanism to ensure they cannot claim equity on the property in the future. Or at least I hope there is... cohabitation agreement, deed of trust or something else that canmake everything clear.

What percentage of the rent/ contribution would be taxable is a separate story but probably linked to the above.  

Why shouldn’t a partner be able to claim equity if they’ve helped repay your mortgage? 

I am not planning to answer all similar questions (and I am sure there will be many) but there are quite a few different perspectives to look at this.

And why should they? They would be paying off another landlord's mortgage regardless. As I myself have done for more than 8 years... I have been with my partner for quite some time now and if it all goes well in the next couple of years, hopefully then there is marriage, family, etc. I am not planning to take advantage of anyone.

You generally don’t have sex and love your landlord though 

TripleH

When I received money under the rent a room scheme I put it in 'other notes' on my tax return (end of the return). Whether I had to or not, to me the key point was I had informed HMRC but didn't include it in the property rental section as it would show as income subject to tax.

silvercar

General advice is for the “renter” to pay half the running costs and then save any difference between that and what a lodger would pay into a separate account. In the event of a marriage, it’s a savings pot for the couple to do what they like with. In the event of a split, it’s a fund for the “renter” to move on with their life elsewhere. 

Nothing is cost neutral. If the owner had taken on a genuine lodger into their spare bedroom they would have gained more in rent than a split of the bills. 

Dazed_and_C0nfused

TripleH said:

When I received money under the rent a room scheme I put it in 'other notes' on my tax return (end of the return). Whether I had to or not, to me the key point was I had informed HMRC but didn't include it in the property rental section as it would show as income subject to tax.

That's totally wrong.  It should have gone on the Income From Property page, there is a specific question about Rent a Room.

If you’re claiming Rent a Room relief and your rents are £7,500 or less (or £3,750 if let jointly), put ‘X’ in the box

And the accompanying notes specify this,

Box 4: If you’re claiming Rent a Room relief and your rents are £7,500 or less

If you let furnished rooms in your home and your total income was less than the Rent a Room exemption, £7,500 (£3,750 if let jointly) enter X in box 4. You do not need to complete the rest of the UK property pages if this is your only letting income.