Not paying tax on rental income

[katemac1]

I am about to move in with my boyfriend and so the flat I have a mortgage on will be empty. A friend has asked if she can rent it for a short period. I really don't want to go through the hassle of changing my tax code, keeping accounts, filling in a tax return etc for the sake of a few months rent. How likely am I to get busted by HMRC and what are the penalties?

[daffy654]

You would need to inform your mortgage provider that you are renting it out as well as the tax people.
I don't know how likely you are to get caught or what the penalties would be.

[katemac1]

Thanks Daffy. My mortgage provider said it's fine as long as there is no written rental contract

[DTCwordfan]

and your insurance.....

[AlBags]

Your friend is a caretaker .. that's all.
I'm sure you can arrange a 'personal transaction' to cover that.
Just watch the council tax situation.

[grannydi]

If you don't have a rental agreement, you could find yourself in trouble if your 'friend' refuses to leave or doesn't pay the rent. Be very careful.
It's not such a hassle as you think it may be, and you can claim for repairs etc at end of the agreement, which may mean that you don't actually pay any tax.
Go onto HMRC website to find out what you can claim.
Penalties can be large for nondeclaration.

[katemac1]

This is much more complicated that I first thought so def better just to put flat on the market. Thanks for all your help.

[DTCwordfan]

Don't be too hasty, kate.

(i) properly set up, it might give you a nice supplementary income, especially if it is a nice flat in a des res area - i.e. don't rent to a friend casually but set it up properly....perhaps use an agency to help take some of the weight off re checking folk out, contracts, etc etc etc.

(ii) it provides you with security

(iii) it provides you with a base if something goes wrong with your relationship (hopefully not) and it means your eggs are not in one basket....

[AlBags]

Kate ..
Just let them use it! : )

[katemac1]

Actually both good points Albags and DTcrosswordfan. I had suggested letting her stay there but she says that's not fair on me. But it would simplify things and give me a chance to think about whether I want to take on the hassle of renting. Thanks again.

[AlBags]

I'm sure there cab be some financial compensation arranged.
Ask her to pay a couple of months agreed amount .. and take it as it goes.
So long as you know here well enough.