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Posted Mon, 19 Aug 2024 15:03:46 GMT by es1234567890
I am looking for advice on my situation - I have called HMRC and no one seems to know the answer. I currently rent a 2-bed flat from my landlord and I live with a friend of mine. We moved in on the same day and we split rent and bills 50/50. However, it is only my name on the lease and I have sublet rights - the landlord wanted to do it this way as she thought it was easier to have a single point of responsibility. It has come to my attention that I may have to pay tax on the rent my friend pays under the Rent a Room Scheme. I cannot seem to find a straight answer to this question online and I have rang HMRC a couple of times and no one seems to be able to give me an answer. My first question is whether my situation as a renter falls under the Rent a Room Scheme, or whether it only applies to those who own the property? If it does apply to me, would the rent that I pay to my landlord be considered a deductible expense? In this case, it would mean I would only be liable to pay tax if I was charging my friend more than 100% of what I owed to my landlord. If it is not considered a deductible expense, would I have to request that the landlord add my friend to the tenancy agreement (so that we are joint tenants) before I reach the £7500 limit to avoid being liable to pay any taxes?
Posted Tue, 20 Aug 2024 11:00:18 GMT by HMRC Admin 8 Response
Hi,
Rent-a-room applies to income from providing furnished residential accommodation in the taxpayer’s only or main residence.
For example, a taxpayer may benefit where they take in a lodger.
Rent-a-room applies to people who let a room in a home they rent as well as to people who own their homes.
Your question regarding taxation and expenses is covered at PIM4030. The rules either exempt rental income or tax it on a more favourable basis. Under the rent-a-room scheme a taxpayer can be exempt from Income Tax on income from furnished accommodation in their only or main residence if the gross receipts they get (that is, before expenses) are £7,500 or less, see PIM4012. But they can’t then claim any of the expenses of the letting, see PIM4020.
Further information is available at:
PIM4001 - Rent-a-room: overview
Thank you.

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