Updating post from Reddit.
Rented a three bed flat from landlords and my bf lives there. I rent out the other rooms. Mind you I DO NOT make any profit off that flat. My bf send me lower rent. So essentially he gets a discount and I make no money but rather just act as middle man when the rent is paid. I spoke to a solicitor briefly and looks like I don’t need to pay rent but want to clarify to make sure.
I think you should go with what your solicitor told you rather than anything on here. For a start, the solicitor is legally qualified and most of us aren’t, and secondly I would assume that you gave him/her a clearer explanation than the one above.
Legally qualified to be a solicitor, not an accountant/tax advisor.
So you have 'lodgers' as your partner is your tenant. You have £7.5k tax free allowance. You may however need to still submit a self assessment annually.
Partner is a 'lodger' too (if OP has lease of whole property and partner is paying rent to OP for occupation)
Does your landlord know that you sub-let ? Is it allowed in your tenancy agreement? There are so many problems here for both you and the landlord if something goes wrong.
Also would it not be classed as a hmo and need correct licensing? Tennant lives at property renting with bf, two more rooms are rented out making it hit the criteria of hmo (at least 3 tenants live there, forming more than one household). If it is unlicensed the tenants can claim back rent paid. https://www.gov.uk/private-renting/houses-in-multiple-occupation#:~:text=Your%20home%20is%20a%20house,kitchen%20facilities%20with%20other%20tenants
It is an HMO (using definition you shared).
Licensable (needs licence) depends on local area. 5+ppl HMO Mandatory HMO everywhere in England, 3-4ppl HMO may be licensable as Additional HMO depending on if local council operates such a scheme.
Ah i didnt realise the licence was mandatory from 5 people and set lower by some councils to 3. So yes it is a hmo but might not need a license. Op would still need to make contact with the council and make sure all adjustments are made in line with the hmo regulations surely?
(if HMO not licensable) OP does not need to contact council proactively.
But they should be aware (as you hint) that some HMO regulations still apply (nationally and to all HMO licensable or not) as relates to standards. They will want to think about compliance with these (although practically less likely to be flagged and flagged as an issue - if not licensable)
I think these (HMO standards regardless of licensable or not) are here: https://www.legislation.gov.uk/uksi/2006/372/made
Other regulations apply to rental properties more generally..
Yeah it does read like op was just trying to avoid liability though which I really hate. Why should people avoid rules and regs it just annoy anyone who does it properly. I bet they didn't even have landlords permission.
What are you on. Be clear
sorry I clarified that I rent it as a tenant then I sublet it
Then no, you can’t offset the rent you pay from the income you receive. Tax is due.
How much is the rents collected from the rooms?
Get an accountant. If you want to know about law ask a solicitor.
There is a big difference between renting to someone and someone paying their share of the rent
tax for the PERSON which is what most private landlords are (as opposed to a business) pay tax on INCOME so yes you need to declare it through self assessment.
business have differnt taxation methods where they are taxed on profits so if an overall loss is made it is not liable.
You ate making the money to pay the mortgage? So you are saying that you dont make anything extra after that?
It would count as income before the mortgage payment afiak. And you would pay tax on that. If you are not setup as a ltd company. If you are it would be different.
Explain the no profit thing. I guess the value of the flat is increasing while you’re paying off a mortgage. Or are you sub letting?
I wrote that I rent it. Now I realise that I should have clarified that I rent as a tenant. Sorry!
You would need to make sure you report your rent is used to offset the rental income in your tax return. Then if there is no profit there is no tax due. But how would you account for your share of the rent for the room(s) you don’t rent out I wonder?
So, You asked a legal professional but want strangers on the internet to have the deciding say? Interesting take, normally its the other way round.
I'd speak to an accountant though - as you can already see from the comments you will get wildly differing viewpoints from randos on reddit - an accountant will be able to go more into your situation, ask you the right questions and give you the right answer.
I wanted to see if someone had similar experience that’s all
Thats fair enough, but even if they do - there's nothing to say that how they dealt with it was right or applicable to you - Seek professional advice so that you know that you're dealing with it correctly :)
You are receiving income and you need to pay tax on income. Also you need to check if you can sublet the flat, most landlords to not allow.
What tax will I pay if I DO NOT make any money? I do not charge above actual rent!
You can't pay tax on a loss.
Is this a ltd company? If then get an accountant even if it isn't get an accountant
You can as a higher rate taxpayer landlord with a big mortgage.
Mortgage interest is not tax deductable (you just get 20% tax credit now) so it's not that hard to make a loss.
Doesn't sound like the situation here, but I don't want anyone in a different situation being misled by the "don't pay tax on a loss" comment.
Having been caught in a loss making property myself in the past I can confirm this is correct.
Your mortgage interest combined with unable to claim that off your tax can absolutely leave you in the red AND paying tax
We don’t know if there’s genuinely a loss though… far more detail is needed.
I rent as a tenant sorry I should edit the post
please check your messages