What are the tax implications of renting from my girlfriend’s mother?

Q I’m 23 and will shortly move into my girlfriend’s family home so we can save money for a deposit. I will be paying £400 a month in rent to my girlfriend’s mother. What are the tax implications for my new “landlord”? Is this income that will need to be declared? Is it taxable? How does the UK tax system work with “informal” rentals such as this? PC

A As you will essentially be a lodger in the home of your girlfriend’s mother, under the “Rent a Room” scheme the first £4,250 of rent your landlady receives each tax year will be tax free.

However, the amount of rent over that annual figure, which in your case will be £550 (ie £400 x 12 minus £4,250), will be taxable and will have to be declared by your girlfriend’s mother to her tax office. If she’d rather not bother, she needs to reduce the rent you pay to £354 a month, which brings it just under the annual £4,250 threshold.

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