Charging my son Annual Board instead of monthly? and any tax implactions

digitallife555

Hi everyone, Firstly sorry if this is in the wrong thread (Not sure as its family AND tax related). Cutting to the chase, My son has been paying a monthly board to us for the last few years at a very low rate, he's saving plenty and as he knows all about the costs of living etc ,and is aware that he'll have to pay more in rent he has come up with a suggestion to "Lock in a rate".

Basically he wants to pay 2 years worth of board in one go £5000 directly to me instead of helping out with the weekly shop, so he knows he's covered and can concentrate on other things, We're fine with this but a college ate work has told me that there MAY be tax implications if 5 grand suddenly turns up in my bank account over night!! So im just asking if this is correct or not before i tell him no problem or to leave it as is with an annual increase in his board instead.

i have seen that there is an allowance for board/renting out a room but not sure if i would be covered by this or not, I certainly don't want a sudden bill for taxes, but can't find any recent information on the allowance and not 100% that we'd be covered.

if anyone has more up to date info that'd be a great help or if anyone else has had a similar issue how was it dealt with? My better half is pushing for this but i just want to be safe with regard to taxes.

Thanks for looking, and again sorry if this is the wrong board (pun unintended)

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6665741/charging-my-son-annual-board-instead-of-monthly-and-any-tax-implactions

What made you think tax was relevant here?

kinger101

There won't be tax implications.

The board is just contribution to household costs and it's normal for these to be shared among adults in a household where they have income.

Even if HMRC argued there's a rent element in there (which they won't) it would be covered by rent a room relief.

digitallife555

https://forums.moneysavingexpert.com/discussion/comment/81977585#Comment_81977585

Thanks for the reply, It was more things someone at work said that probably got me overthinking, He basically said that now more and more tax is digital and HMRC "Sees" what goes into your bank so they might be "Interested" to see a 5K deposit comming in and "Want their slice" (Even though he'd have already paid them their 20% on his PAYE)

I just wanted to see if there was any truth to his thinking or not before i agreed to My son's and otherhalfs idea

Thanks :

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81977704#Comment_81977704

HMRC would normally only look in your bank account, if they were looking for something specific. They do not routinely scan everybody's account- even if they wanted to, it would be a massive drain on their resources.

'Making Tax Digital' is for businesses not for individuals.

I suspect your colleagues have been reading too much misinformation online.

digitallife555

https://forums.moneysavingexpert.com/discussion/comment/81977944#Comment_81977944

Yeah, it seems like it. I think they are just trying to be helpful but it just caused a bit of friction between my better half and son vs me wanting to make sure everything was ok.

Thanks for helping to clear it up👍️

RAS

To be blunt, you might want to do the math, and also to clearly specify what is included in the mere £200 per month he'd be paying. That barely covers food for most people.

digitallife555

https://forums.moneysavingexpert.com/discussion/comment/81978538#Comment_81978538

Oh belive me the math has been done many times over, The thing is trying to get a good balance of home life vs financial life both for us and him, He's trying his best fo get money for a house deposit within the next 3-5 years, whilst we are trying to put aside as much as we can for older life, my other half only works part time(and NO she won't do more) im getting burnt out doing a 40 hr rotating shift in a factory so any extra aincome i get will be going nito either my pension or a recently opened S&S ISA, Else we'll be living off gruel in our retirement lol but, Thanks for the comment :)

rach_k

If you do need or use the money he contributes towards the household budget, I think fixing a price now is risky and potentially unfair to you. Prices could change dramatically, or somebody's needs/expectations could change. Food costs could sky rocket or he could develop a taste for the finer things. How will that be dealt with if he's already paid you? Or what if he gets a sudden surprise lump of cash and wants to move out in 6 months - will you refund him? Will you be able to, or will you have put it in your pension?

I would suggest to him that he should put the amount he expects to pay you into a savings account and benefit from some interest, while knowing that amount isn't available for his deposit. Don't lock in a price for more than a few months at a time. I understand that he'd like it paid upfront so he can think about other things, but he's an adult and adults have to deal with monthly payments and price changes.

sheramber

He is in for a shock if he thinks £200 a month will cover his food and utilities when has his own house.

digitallife555

Thanks for all the thoughtful comments posted, We've had another converstaion and compromised on an 18 month "Lock in period @ £230 a month" With an "Emergency" Increase to be considered if the cost of living becomes even more ridiculous (He knows we are doing him a big favour by keeping his board as low as we can for the time being) But he's also willing to increase his payments to help.

I think this is the best for our family situation at this time, and all your comments have been helpful not just to me but the family in general, We've had to have a few honest and frank discussions that to be honest have felt akward and a little fractious at times, but thats family life at times too right?

Thanks again for all your help.