Lodger Arrangements

[gunshow]

A friend of mine lives on his own and pays his own mortgage.

A friend of his has recently seperated from his partner and is 'Temporarily' staying with said friend.

As the two are good friends no formal rent is being charged. However, I believe that the lodger is making contributions to the weekly food shop.

How does this setup stack up from a rental income perspective?

Thanks in advance.

[Peter D]

He is not a lodger, he is a guest. He is only covering the food bill not parts of the mortgage and house running costs. Would you put up a nnedy friend for a while ???. If the house owner wanted to he could accept him as a Rent a Room lodger and be tax exempt to £4,250 of rent any way. Do you have a problem with him staying there or something. Regards Peter

[pawncob]

Doesn't sound as if any rent is actually paid. Anyway, the lodger rules allow £4250 p.a. so it probably isn't necessary to declare it.

[gunshow]

Thanks for your swift responses guys.

Reason I ask is that the friend in question has just gone self employed and I wanted to make sure he didnt have to declare any of it - no underhand motives!!.

Cheers

[robbob]

Hi gun

I would advise your friend he should be a little bit careful that he itemises any funds received from his friend that he uses to put in the bank or pay bills.

If the tax man comes along at a later date and finds cash amounts being banked or spent that are non business assets then he may presume that these amounts are additional cash sales if there is no evidence to prove otherwise.

[Caro]

Is the government rent a room scheme allowance a per person tax saving? So for example if my partner and I have two rooms available in our jointly owned home, can we each use our £4250 allowance?

[pawncob]

Sorry, Caro, if you both claim the allowance, it's limited to £2125 each.