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Where Taxpayers and Advisers Meet

Private use adjustment

Rsk005
Posts:1
Joined:Fri May 31, 2019 4:14 pm
Private use adjustment

Postby Rsk005 » Tue Dec 31, 2019 12:27 pm

Hello some help needed please .
my sister is a live in landlord with 2 lodgers , she has 50% ownership with myself ( I do not live there )
I made errors on previous 3 years tax returns ie I didn't enter anything on private use adjustment .
I have spoken to HMRC and explained this . But although I need to adjust -25% as private use ,
what % if any ? do i need to adjust council tax / buildings insurance as these would have to be paid anyway by us as we pay all bills
inc council tax as part of rental agreement . Also previously I halved all entries on tax return ie rents received , cost of repairs , bills ect
was this correct ? as now realised the entry on private use needs adjusting .
Thanks in advance for any advice .

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Private use adjustment

Postby darthblingbling » Tue Dec 31, 2019 4:13 pm

Quick question, how much income does she generate annually from renting out the rooms?

rks2018
Posts:63
Joined:Sun Sep 16, 2018 1:27 pm

Re: Private use adjustment

Postby rks2018 » Tue Dec 31, 2019 4:52 pm

2016/17 was about 7500 ,
2017/18 is £5700
I dont live there , just my sister with 2 lodgers ATM
Thanks

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Private use adjustment

Postby darthblingbling » Tue Dec 31, 2019 7:13 pm

Does this not qualify for rent a room relief?

rks2018
Posts:63
Joined:Sun Sep 16, 2018 1:27 pm

Re: Private use adjustment

Postby rks2018 » Tue Dec 31, 2019 7:37 pm

Hi I didnt think it did ? My sister is also named on property I live in , its only way I could get the property at the time , TMB suggested it , so I thought rent a room relief only applied to if u own 1 property ? Unless I'm mistaken
The house my sister lives in is her main home . the house I live in has always been my main home since I bought it .
Thanks

rks2018
Posts:63
Joined:Sun Sep 16, 2018 1:27 pm

Re: Private use adjustment

Postby rks2018 » Tue Dec 31, 2019 7:59 pm

My sister name is on both properties , at the time I couldn't get mortgage without her being in mortgage , though all payments for bills and mortgage has always been made myself . we are shared owners , and she a lower tax payer than I . iv kept it like that bec If I change or transfer share of equity to myself I'll be paying more tax ect and also higher cgt when we sell ? . but I can utilise rent a room relief be easier and cheaper ? I was told the relief was £7500 pa but as we are joint owners its £3500 each . as sister is only one occupying I can only use £3500 hence I thought it be better not no but utilise putting down for bills ect but now only to realise that I should have put down % to private use , not so sure I done the right thing now ?

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Private use adjustment

Postby darthblingbling » Sat Jan 04, 2020 4:53 pm

As long as it's her main residence and it's furnished lodgings it should be fine.

With regards to joint ownership, seems beneficial ownership is wholly with your sister and she's getting all the income? If so she should get the full allowance

rks2018
Posts:63
Joined:Sun Sep 16, 2018 1:27 pm

Re: Private use adjustment

Postby rks2018 » Sat Jan 04, 2020 5:02 pm

Thanks for your info, sister does not get any beneficial at all , but as its shared ownership I just split the tax, earnings , costs ect 50/50 when doing our self assessment and pay the tax owed . Though just had to ammend last years and this years expenditure and private use as I didnt put any figures for that before .
No I have deducted expenses by 33.33% as a third and also removed council tax less 25% as hmrc said that she would have to pay this anyway .
Have now written to hmrc to amend 2015/16 and 2017/18 tax years to reflect these changes .

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: Private use adjustment

Postby darthblingbling » Sat Jan 04, 2020 6:20 pm

So you split the income from the lodger 50:50?

rks2018
Posts:63
Joined:Sun Sep 16, 2018 1:27 pm

Re: Private use adjustment

Postby rks2018 » Sat Jan 04, 2020 7:55 pm

Hello yes all income and expenditure is split 50/50 . Only difference in change I made was to remove council tax and to add 1/3 to private use on sisters part of return
.
Thanks


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