Rent a room?


C

Clive Sweeting

Another stupid question from me:

If I paid someone rent for office space in their home, as I understand it,
they can claim about £4000 worth of income before having to pay tax on it.

However, I am unclear about the implications this has for Capital Gains Tax
If they choose to sell the property.

Are they now liable to pay CGT if they sell up?
 
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C

Clive Sweeting

Another stupid question from me:

If I paid someone rent for office space in their home, as I understand it,
they can claim about £4000 worth of income before having to pay tax on it.
Now I'm confused. Looks like you can' do that.

If anyone is doing rent a room, can they clarify if an individual, not a
business, can rent part of their house to a business, and claim the
rent-a-room allowance.

I beginning to understand why there are so many accountants in
existance.....
 
J

John Pointon

The Revenue's view is that the rent-a-room scheme is for lettings to
private individuals and certainly not for business lettings.

John Pointon
Accountant, Tax Consultant
"In business to grow your business"
 
C

Clive Sweeting

The Revenue's view is that the rent-a-room scheme is for lettings to
private individuals and certainly not for business lettings.
Thank you. Someone I know, his accountant told him it was ok, I got all
excited, until I read the docs.
 
R

Ronald Raygun

John said:
The Revenue's view is that the rent-a-room scheme is for lettings to
private individuals and certainly not for business lettings.
There should be no problem with "business lettings" of the type where
a business pays for accommodation on behalf of, e.g., visiting staff.

However, the Rent-a-Room scheme rules do require that the subjects being
let must be ordinary lettings of (furnished) living accommodation. They
specifically disallow lettings of rooms as an office or for other
business purposes. But if the lodgers do some of their business work
there, e.g. at evenings and weekends, without overtly carrying on a
business there, that would be OK.

What is not immediately obvious is whether, if Rent-a-Room exemption
applies, this also exempts the resident landlord from having to
declare a proportion of the use as not qualifying for PRR upon sale,
as he would have to do if the nature of his lettings did not fall
within the RaR scheme (for example because the earnings exceed
£4250 in any year, or if a room is rented as an office).
 
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D

Doug Ramage

Clive Sweeting said:
Another stupid question from me:

If I paid someone rent for office space in their home, as I understand it,
they can claim about £4000 worth of income before having to pay tax on it.

However, I am unclear about the implications this has for Capital Gains Tax
If they choose to sell the property.

Are they now liable to pay CGT if they sell up?
Rent a room relief is only for residential use, not business use.
 
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