Advanced search

Mumsnet has not checked the qualifications of anyone posting here. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Declaring 'Keep' to the Tax Office

(7 Posts)
nibblingfingernails Mon 13-Jun-16 21:33:31

DD is 22, she pays me £100 a month, I have just been talking with someone from WTC/CTC and asked them if I needed to put this in as another income. Her response was "Do I declare it to the tax office?" My answer to her was "No, should I?" She has recommended that I ring Tax office and speak with them.

I am worrying now, obviously I ask her to contribute as she needs to know that life is not free etc but it honestly didn't cross my mind that I may have to declare it to the tax office!

drspouse Mon 13-Jun-16 21:41:48

Look up the rules on lodgers - the Rent a Room scheme. I don't know if it applies to relatives though.

nibblingfingernails Tue 14-Jun-16 17:41:43

So I have just had a look on Rent a Room and found this -

The Rent-a-Room Scheme allows owner occupiers and tenants to receive tax-free rental income if you provide furnished accommodation in your only or main home.

The annual Rent-a-Room limit is £4,250. This reduces to £2,125 if someone else receives income from letting accommodation in the same property, such as a joint owner. The limit is the same even if you let accommodation for less than 12 months.

When you can use the Rent-a-Room Scheme
You can use the scheme if:

you let a furnished room to a lodger
your letting activity amounts to a trade, for example, if you run a guest house or bed and breakfast business, or provide services, such as meals and cleaning
When you can’t use the Rent-a-Room Scheme
You can’t use the scheme if the accommodation is:

not part of your main home when you let it
not furnished
used as an office or for any business - you can use the scheme if your lodger works in your home in the evening or at weekends or is a student who is provided with study facilities
in your UK home and is let while you live abroad
the whole of your home, rather than a part of it
Rent-a-Room Scheme
If your gross receipts from letting are not more than the Rent-a-Room limit of £4,250 (or £2,125), you don’t pay tax on your profit. If they are more than the limit, you may still be able to benefit under the Rent-a-Room Scheme.

Your gross receipts include:

rental income (before expenses)
any amounts you receive for meals, goods and services, such as cleaning or laundry
any ‘balancing charges’
You usually count your gross receipts for a tax year - that is, from 6 April one year to 5 April the next.

If your letting activity amounts to a trade, you count your gross receipts for your basis period. Helpsheet 222 How to calculate your taxable profits provides more information.

If your gross receipts are less than the Rent-a-Room limit
If your gross receipts are less than £4,250 (or £2,125), you are automatically exempt from tax on that income.

If you have made a loss, however, it may be better for you to pay tax in the normal way - that is, on your receipts less expenses. You will need to tell HMRC that you want to do this within the time limit.

So, Do I let the tax office know as my DD's keep is way below the requirements! confused

SlightlyperturbedOwl Tue 14-Jun-16 17:48:56

Not an expert but I would imagine that £100 a month won't cover much more than food and toiletries etc, so really this is her share of living costs. In other words if she bought her own food, light bulbs, washing powder and so on this wouldn't even go through your purse? I can't see how this is declarable as it isn't 'profit' it's just her paying her own expenses?

OneBiscuitAtATime Tue 14-Jun-16 17:50:14

But how is that different to a cohabiting couple both contributing for example? She is an adult family member and pays s share of the outgoing a relative to her income. Only commenting as I'm surprised, hopefully someone who actually knows will be along shortly.

nibblingfingernails Tue 14-Jun-16 18:03:26

I only want to do what is right, it never occurred to me that I may have to pay/let the tax office know that DD pays keep. I am rather tempted to tell her to live here for free to save the hassle! grin

OurBlanche Tue 14-Jun-16 18:07:11

No, you don't. Your DD could simply spend that money on food for the household. Then it would not have passed through you at all, that you collect it for the family kitty is neither here nor there. It isn't money you are earning, it is money your family is spending on food and bills, all adults contributing.

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now