Can lodger work from home?

1404

Uriziel said:

I think your word choice could be better. When people say WFH usually they mean that they have an office somewhere but choose to work from home here and there. However what you are describing is that your lodger is running a business from home. It has absolutely no connection to their actual job. They would end up registering your address on company's house as their business address which makes it a business residence. You would be liable for all kinds of business regulations. I would ask them if they are planning on using your address as their official business address.

Such as what?

user1977

Uriziel said:

You would be liable for all kinds of business regulations.

No, the OP would not be responsible for any "business regulations" just because the lodger uses the address as their registered office.

1404

pieroabcd said:

Bookworm105 said:

pieroabcd said:

1404 said:

pieroabcd said:

It *seems* to imply that having 1 Vs 2 lodgers makes a difference with regards to having a letting/business use.

Anyone has more knowledge on the subject?

If you're asking about CGT when you sell, what part of my breakdown isn't clear? 

My question is if the CGT applies even if the owner has had only one lodger at any time during his ownership (rather than 2).

it is a fundamental principle that CGT liability applies to the sale of all property, the real issue is what relief is available to offset that liability

- if the owner has lived in the property as their only/main residence for the entire ownership period then they get 100% Private Residence Relief (PRR) so CGT liability = zero 

- on the other hand, if the property has, at the same time, been occupied by more than the owner & spouse/children, ie it includes a lodger, then PRR is restricted

- the restriction is applied to the part of the building which is not occupied by the owner as their main home, ie it is occupied by 1 or more lodgers instead.

- Where there is more than 1 lodger, then a decision needs to be made as to whether Lettings relief is available at all . If the owner is now running a lodging house as a business rather than as their own home then it is not. That is a matter of the individual circumstances and may need to go to court for a judgement.
 CG64702 - Private residence relief: letting: lodger - HMRC internal manual - GOV.UK

- where Lettings Relief is available, then it is capped at a maximum of £40,000

There is no proscriptive methodology for working out how the % of the building which is not occupied as the main home. You may, for example, base it on number of bedrooms occupied by lodgers compared to all other rooms (*), or you may do it by respective floor area (M2)

* for reasons I don't know, there is a convention that bathrooms and toilets are excluded from the total room ./ floorspace count

Thanks.
That link is useful and confirms what the .gov page that I found reads (full relief in case of a/1 lodger).
Do you know if by "a lodger" they mean
- one lodger only at any given time
- or one lodger one off 
? In the former case the owner may decide to replace the only lodger while retaining the full relief, while on the second case maybe the case of more than one lodger would kick in, even though they had only one lodger at any given time?

Does your lodger live as part of the family and share meals with you?

pieroabcd

1404 said:

pieroabcd said:

Bookworm105 said:

pieroabcd said:

1404 said:

pieroabcd said:

It *seems* to imply that having 1 Vs 2 lodgers makes a difference with regards to having a letting/business use.

Anyone has more knowledge on the subject?

If you're asking about CGT when you sell, what part of my breakdown isn't clear? 

My question is if the CGT applies even if the owner has had only one lodger at any time during his ownership (rather than 2).

it is a fundamental principle that CGT liability applies to the sale of all property, the real issue is what relief is available to offset that liability

- if the owner has lived in the property as their only/main residence for the entire ownership period then they get 100% Private Residence Relief (PRR) so CGT liability = zero 

- on the other hand, if the property has, at the same time, been occupied by more than the owner & spouse/children, ie it includes a lodger, then PRR is restricted

- the restriction is applied to the part of the building which is not occupied by the owner as their main home, ie it is occupied by 1 or more lodgers instead.

- Where there is more than 1 lodger, then a decision needs to be made as to whether Lettings relief is available at all . If the owner is now running a lodging house as a business rather than as their own home then it is not. That is a matter of the individual circumstances and may need to go to court for a judgement.
 CG64702 - Private residence relief: letting: lodger - HMRC internal manual - GOV.UK

- where Lettings Relief is available, then it is capped at a maximum of £40,000

There is no proscriptive methodology for working out how the % of the building which is not occupied as the main home. You may, for example, base it on number of bedrooms occupied by lodgers compared to all other rooms (*), or you may do it by respective floor area (M2)

* for reasons I don't know, there is a convention that bathrooms and toilets are excluded from the total room ./ floorspace count

Thanks.
That link is useful and confirms what the .gov page that I found reads (full relief in case of a/1 lodger).
Do you know if by "a lodger" they mean
- one lodger only at any given time
- or one lodger one off 
? In the former case the owner may decide to replace the only lodger while retaining the full relief, while on the second case maybe the case of more than one lodger would kick in, even though they had only one lodger at any given time?

Does your lodger live as part of the family and share meals with you?

Yes.       

1404

pieroabcd said:

1404 said:

pieroabcd said:

Bookworm105 said:

pieroabcd said:

1404 said:

pieroabcd said:

It *seems* to imply that having 1 Vs 2 lodgers makes a difference with regards to having a letting/business use.

Anyone has more knowledge on the subject?

If you're asking about CGT when you sell, what part of my breakdown isn't clear? 

My question is if the CGT applies even if the owner has had only one lodger at any time during his ownership (rather than 2).

it is a fundamental principle that CGT liability applies to the sale of all property, the real issue is what relief is available to offset that liability

- if the owner has lived in the property as their only/main residence for the entire ownership period then they get 100% Private Residence Relief (PRR) so CGT liability = zero 

- on the other hand, if the property has, at the same time, been occupied by more than the owner & spouse/children, ie it includes a lodger, then PRR is restricted

- the restriction is applied to the part of the building which is not occupied by the owner as their main home, ie it is occupied by 1 or more lodgers instead.

- Where there is more than 1 lodger, then a decision needs to be made as to whether Lettings relief is available at all . If the owner is now running a lodging house as a business rather than as their own home then it is not. That is a matter of the individual circumstances and may need to go to court for a judgement.
 CG64702 - Private residence relief: letting: lodger - HMRC internal manual - GOV.UK

- where Lettings Relief is available, then it is capped at a maximum of £40,000

There is no proscriptive methodology for working out how the % of the building which is not occupied as the main home. You may, for example, base it on number of bedrooms occupied by lodgers compared to all other rooms (*), or you may do it by respective floor area (M2)

* for reasons I don't know, there is a convention that bathrooms and toilets are excluded from the total room ./ floorspace count

Thanks.
That link is useful and confirms what the .gov page that I found reads (full relief in case of a/1 lodger).
Do you know if by "a lodger" they mean
- one lodger only at any given time
- or one lodger one off 
? In the former case the owner may decide to replace the only lodger while retaining the full relief, while on the second case maybe the case of more than one lodger would kick in, even though they had only one lodger at any given time?

Does your lodger live as part of the family and share meals with you?

Yes.       

Have you looked into the significance of that?  I can't find the page I was going to send you,

1404

Bookworm105 said:

1404 said:

Does anyone know what my CGT liability may be? 

Gain minus available relief minus CGT allowance

whether you were running a property trading business rather than taking in lodgers should be self evident

Can anyone explain the difference?

FreeBear

Uriziel said: However what you are describing is that your lodger is running a business from home. It has absolutely no connection to their actual job. They would end up registering your address on company's house as their business address which makes it a business residence. You would be liable for all kinds of business regulations.

If the lodger is running a small business as a sole trader, there is no requirement to register with Companies House. However, they may need an address for "official" correspondence, in which case, an accountant's office may be preferable (or a PO box). Alternatively, any number of virtual offices can provide a business address (for a fee).

pieroabcd

1404 said:

pieroabcd said:

1404 said:

pieroabcd said:

Bookworm105 said:

pieroabcd said:

1404 said:

pieroabcd said:

It *seems* to imply that having 1 Vs 2 lodgers makes a difference with regards to having a letting/business use.

Anyone has more knowledge on the subject?

If you're asking about CGT when you sell, what part of my breakdown isn't clear? 

My question is if the CGT applies even if the owner has had only one lodger at any time during his ownership (rather than 2).

it is a fundamental principle that CGT liability applies to the sale of all property, the real issue is what relief is available to offset that liability

- if the owner has lived in the property as their only/main residence for the entire ownership period then they get 100% Private Residence Relief (PRR) so CGT liability = zero 

- on the other hand, if the property has, at the same time, been occupied by more than the owner & spouse/children, ie it includes a lodger, then PRR is restricted

- the restriction is applied to the part of the building which is not occupied by the owner as their main home, ie it is occupied by 1 or more lodgers instead.

- Where there is more than 1 lodger, then a decision needs to be made as to whether Lettings relief is available at all . If the owner is now running a lodging house as a business rather than as their own home then it is not. That is a matter of the individual circumstances and may need to go to court for a judgement.
 CG64702 - Private residence relief: letting: lodger - HMRC internal manual - GOV.UK

- where Lettings Relief is available, then it is capped at a maximum of £40,000

There is no proscriptive methodology for working out how the % of the building which is not occupied as the main home. You may, for example, base it on number of bedrooms occupied by lodgers compared to all other rooms (*), or you may do it by respective floor area (M2)

* for reasons I don't know, there is a convention that bathrooms and toilets are excluded from the total room ./ floorspace count

Thanks.
That link is useful and confirms what the .gov page that I found reads (full relief in case of a/1 lodger).
Do you know if by "a lodger" they mean
- one lodger only at any given time
- or one lodger one off 
? In the former case the owner may decide to replace the only lodger while retaining the full relief, while on the second case maybe the case of more than one lodger would kick in, even though they had only one lodger at any given time?

Does your lodger live as part of the family and share meals with you?

Yes.       

Have you looked into the significance of that?  I can't find the page I was going to send you,

I imagine that it means that the lodger  is considered as an extended family member rather than as outsider with whom you are doing business, but it's just my interpretation (statistically I get it all wrong).

1404

Really good article on CGT liabilities having had lodgers:

https://www.thisismoney.co.uk/money/mortgageshome/article-9241823/Have-lodgers-left-liable-capital-gains-tax-want-sell.html 

Bookworm105

pieroabcd said:

1404 said:

pieroabcd said:

1404 said:

pieroabcd said:

Bookworm105 said:

pieroabcd said:

1404 said:

pieroabcd said:

It *seems* to imply that having 1 Vs 2 lodgers makes a difference with regards to having a letting/business use.

Anyone has more knowledge on the subject?

If you're asking about CGT when you sell, what part of my breakdown isn't clear? 

My question is if the CGT applies even if the owner has had only one lodger at any time during his ownership (rather than 2).

it is a fundamental principle that CGT liability applies to the sale of all property, the real issue is what relief is available to offset that liability

- if the owner has lived in the property as their only/main residence for the entire ownership period then they get 100% Private Residence Relief (PRR) so CGT liability = zero 

- on the other hand, if the property has, at the same time, been occupied by more than the owner & spouse/children, ie it includes a lodger, then PRR is restricted

- the restriction is applied to the part of the building which is not occupied by the owner as their main home, ie it is occupied by 1 or more lodgers instead.

- Where there is more than 1 lodger, then a decision needs to be made as to whether Lettings relief is available at all . If the owner is now running a lodging house as a business rather than as their own home then it is not. That is a matter of the individual circumstances and may need to go to court for a judgement.
 CG64702 - Private residence relief: letting: lodger - HMRC internal manual - GOV.UK

- where Lettings Relief is available, then it is capped at a maximum of £40,000

There is no proscriptive methodology for working out how the % of the building which is not occupied as the main home. You may, for example, base it on number of bedrooms occupied by lodgers compared to all other rooms (*), or you may do it by respective floor area (M2)

* for reasons I don't know, there is a convention that bathrooms and toilets are excluded from the total room ./ floorspace count

Thanks.
That link is useful and confirms what the .gov page that I found reads (full relief in case of a/1 lodger).
Do you know if by "a lodger" they mean
- one lodger only at any given time
- or one lodger one off 
? In the former case the owner may decide to replace the only lodger while retaining the full relief, while on the second case maybe the case of more than one lodger would kick in, even though they had only one lodger at any given time?

Does your lodger live as part of the family and share meals with you?

Yes.       

Have you looked into the significance of that?  I can't find the page I was going to send you,

I imagine that it means that the lodger  is considered as an extended family member rather than as outsider with whom you are doing business, but it's just my interpretation (statistically I get it all wrong).

agreed.
it would be very exceptional for a lodger to actually meet those expectations of eating all meals with their landlord as thought the LL was their spouse and they were all one family living there. 
Hard to prove either way of course, but easily open to suspicion that it was not the case.