Rent a room scheme

Hi there, I equally own a property with a friend and I have moved out but he still lives there. He pays the mortgage and sometimes has a lodger to help him. Are we both able to benefit from the Rent A Room Scheme as he still lives there. Or if he gets a lodger in, I am liable for tax on the rent he charges? Many thanks.

Hi,

As per HS223, as long as certain criteria are met as outlined in the guidance, then the Rent a Room Scheme may be considered.

Further information may be required as you have stated that you have moved address, so suitability may change as the property would no longer be your main home when it is let out.

You can find guidance here:

Rent a room in your home

Thank you.

Thanks for your reply. I cannot find any information when the flat is owned by two people and one is living with the lodger and one is not. That is the key piece I need (whether both get the tax benefit or only the person living with them). Do you know where I might be able to find an answer to that question? Thank you.

One thing I read on HMRCs documentation is that we can split the rental income differently as we are not spouses or civil partners it doesn't need to be 50/50. So my friend could collect all the rent and be covered under the £7500 the Rent A Room Scheme (and then he pays our joint mortgage). Does that sound correct? Many thanks.

Hi,

You can find guidance here:

Rent a Room Scheme (Self Assessment helpsheet HS223)

Thank you.

Hi rentaroom77,
Unfortunately no it can only be split in half  PIM4010 - Rent-a-room: exemption limits gives an example where two or more individuals are claiming rent a room.
This splits the allowance £7500 so that each of them claim £3750.
This is regardless of the number of individuals claiming it. 
Thank you.

 

Hi HMRC Admin 20, Thanks for your response. I agree that the allowance can be split £3750 if we were allocating the share of rental income evenly between us. But we have decided to not allocate the rental income evenly between us - this document gives an example and states you can "agree a different allocation". https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-case-studies "In a straightforward case where you own a property jointly with another person (for example, friends, business partners, parent and child or brother and sister) and the property is let out, your share of the rental profits or losses will usually be based on the share of the property you own. Unless you agree a different allocation - this is explained further below." So my friend receives the rental allocation and I never see that money to be taxed on. What are your thoughts on this?

Hi,
Rent a room relief is a flat £3750 for jointly owned property regardless of the split.
However you can choose not to claim this relief instead claiming under method A which is a simple profit less expenses.
You mention that your friend receives the rental 100%.
If you want to use this method you will need to declare the beneficial split to HMRC.
You should complete a form 17 as the property is jointly owned and attach a declaration of trust.
You can appoint a solicitor for this legal document:
TSEM9860
Thankyou.