Renting to family

20/05/2019 11:00:02
We own 2 flats in the same house. We live in the upper flat and rent the lower flat to our grandson. We are both pensioners and not in good health. He is young and although working he doesn't earn much but it is reassuring to us that he is on hand to help us . Some months we let him off the rent and also we bought a new kitchen for his flat and let him off paying rent for 2 months as he installed it himself.

Just out of interest, are we obliged to charge him rent. We only charge £250 a month. Are we allowed to let him off paying some months? We do self assessment online. Do I just divide what we have received by 12 months and put a note in the self assessment form as to why it's so low. He pays his own Council Tax etc.

Any information on anything we should know about this arrangment would be gratefully received.


Re:Renting to family

20/05/2019 13:58:56

There is nothing in HMRC rules which state you need to charge someone for living in a property you own, or that you need to charge them a particular rate.

You will need to report to HMRC any income you do get from him for rent in any one tax year.

If you incur allowable expenses on the rental property you can deduct these, up to the amount received in rent for the year, but not any more than that.

You would record the rent received and any allowable expenses, up to that value, on your online returns.

If the flat is jointly owned between you it will be 50% each of the income and expenses you report.

You can refer to our Property Income Manual 2130 which gives you information about renting a property at less than market value.

Renting to family

20/05/2019 14:50:05
You can charge what you like. You don't need to justify anything. The kitchen is allowable as you are still letting out the flat.

Renting to family

21/05/2019 07:14:12
Thank you both very much. It has put my mind at rest as I thought there might be some rule about the low rate as I know you have to be careful of things that could be classed as "for the avoidance of tax" like giving away money etc. That's not something that we will be doing though so I haven't read up on it.

I'll definitely follow the link you kindly supplied.