Rent A Room Scheme - and Split House

Discussion in 'UK Accountancy' started by Mikeww, Aug 12, 2003.

  1. Mikeww

    Mikeww Guest

    Under the Rent a Room Scheme someone can rent out a room in their own
    home to someone (for residential purposes) and obtain up to (I think)
    £4250 in the year tax free.

    I have seen a terraced house for sale which is still legally one
    property, but the first floor has been made into a self-contained
    unit, and the ground floor has also been made into another
    self-contained unit.

    If I lived in one "unit" (one floor of the house), and I rented out
    the other floor at no more than the rent-a-room threshold, would
    Inland Revenue still consider this as coming under rent-a-room and
    therefore tax free?

    Or would they consider it as being a rental property?
    Mikeww, Aug 12, 2003
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  2. Mikeww

    Peter Saxton Guest

    How do you mean "legally"? In what way is it legally one property?
    If each unit has a separate entrance I don't think they can both be
    described as your "home".

    Peter Saxton, Aug 12, 2003
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  3. Mikeww

    John Pointon Guest

    You are absolutely correct in assuming that someone can rent out a
    room in their own home for residential purposes and receive up to
    £4,250 by way of rent for their part of the accommodation tax free.

    The legislation is contained in Schedule 10 of Finance Act (No 2) 1992
    although it dates back to Finance Act 1996.

    Clause 4 states "A residence is a qualifying residence if it is the
    individual's only or main residence". Clause 7 interestingly says
    "residence" means a building, or part of a building, occupied or
    intended to be occupied as aa seperate residence, or a caravan or
    houseboat; but a building, or part of a building, which is designed
    for permanent use as a single residence shall be treated as a single
    residence notwithstanding that it is temporarily divided into two or
    more parts which are occuped or intended to be occupied as seperate

    Unfortunately, the Revenue's leaflet IR87 "Letting and your home"
    which can be seen at giveS NO
    indication as to what is meant by "temporarily divided into two or
    more parts", nor do the notes on Land and Property accompanying the
    2003 Self Assessment Return.

    One suspects - and this is pure guesswork - that if portions of the
    premises enjoy seperate mains facilities ie seperate gas and
    electricity meters and are seperately assessed for water rates, then
    they would not be regarded as temporarily divided.

    That is the best I can do. Hope it helps.

    John Pointon
    "In business to grow your business"
    John Pointon, Aug 12, 2003
  4. Mikeww

    Mikeww Guest

    AFAIK, it has only one set of deeds to cover the whole house. It's
    all one property. It's not a house which has been split into
    self-contained units and then different deeds drawn up for each unit.

    So, the one person owns the whole house.

    It'd be the same shared front door into the house, then either along
    the hall for the ground floor "unit". Or up the stairs for the
    upstairs "unit".
    Mikeww, Aug 12, 2003
  5. Mikeww

    Mikeww Guest

    Thanks very much for this John. This is very helpful. I hadn't
    though about the seperate meters aspect. I shall look into this.

    Thanks again.
    Mikeww, Aug 12, 2003
  6. Mikeww

    David France

    Mar 11, 2013
    Likes Received:
    Hi Mike,

    I think they would consider it a rental property. However It would be better for you to seek professional opinion from a legal expert in the field.
    David France, Mar 11, 2013
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