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Where Taxpayers and Advisers Meet

Does lettings relief have a minium rent?

EvilMuppet
Posts: 7
Joined: Fri May 24, 2019 8:48 pm

Does lettings relief have a minium rent?

Postby EvilMuppet » Wed Feb 19, 2020 4:07 pm

Hi,

I am trying to calculate lettings relief for a house the I have owned from 2004-2020, I lived in it from 2004-2009.

i think I understand how to do it but I have particular question for a period of ownership when the flat was let -

In 2017-18, my brother was down on his luck so I rented him the flat paying a token rent of £50pm, the amount did not exceed the Private Residence allowance of £1000pa (on purpose), therefore I had no need to submit a tax return for this (so did not). I have a contract for this period to prove the letting to my brother.

Questions
1) Is there any minimum rent requirements for lettings relief to apply. (i.e does it need to be a market rent?)
2) I am assuming if i am selling the property I can't use the final 18 months PRP and rental allowance for the same period?

Thanks,

Pete

maths
Posts: 7893
Joined: Wed Aug 06, 2008 3:25 pm

Re: Does lettings relief have a minium rent?

Postby maths » Wed Feb 19, 2020 7:57 pm

The legislation provides no requirement for a minimum rent or a letting to an unrelated party if lettings relief is to be obtained.

However, £50 per month is extremely low for renting a complete house in particular if he didn't pay council tax, the utility bills etc.

What happened 2009 to 2017?

I would suggest if HMRC new all the facts that they would deny such relief with respect to the period of letting to your brother.

Where lettings extends to include the last 18 months of ownership (probably 9 months if sold post 5 April 2020) and lettings relief would be available for this 18 months in fact as this period qualifies for private residence relief, no lettings relief is available (ie no double counting).

EvilMuppet
Posts: 7
Joined: Fri May 24, 2019 8:48 pm

Re: Does lettings relief have a minium rent?

Postby EvilMuppet » Thu Feb 20, 2020 3:25 pm

2009-2017 Not let.

He did pay council tax and rates. Do you think this would make a difference?

maths
Posts: 7893
Joined: Wed Aug 06, 2008 3:25 pm

Re: Does lettings relief have a minium rent?

Postby maths » Sat Feb 22, 2020 10:29 pm

There is no black and white, but that would help.

cohen
Posts: 3
Joined: Sun Feb 14, 2016 12:36 am

Re: Does lettings relief have a minium rent?

Postby cohen » Mon Mar 02, 2020 5:21 pm

Hi

See the following HMRC manuals reference:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64713

The letting should be on a commercial basis - which this is clearly not.

Cohen.


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