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TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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My two sons have just bought a 2 bedroom flat in London

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My two sons have just bought a 2 bedroom flat in London (with my help!) and I was wondering if you could help with the following questions.
1. For the next year or so my elder son William will be living in the flat and sharing it with a friend. My younger son Jack will stay on in his multi-occupied rented property. The friend will pay £525 per month, i.e £6300 per year. We would like to go for the £4250 allowance system, so the boys will have to pay tax on £2050.
My question is: should William as the occupier pay the full tax, or should William and Jack as co-owners each pay tax on £1025. (I’m not asking what’s fair, they will share the cost, I’m asking how the tax man would want it paid.). The Govt wording below suggests they would each pay half, except that Jack at the moment is not an owner-occupier, just an owner.
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.
HelloWhere there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed.The one living there would receive a better tax position based on their occupation. The boys could agree that William will claim the letting.The brothers are not in a partnership so they can choose how to divide the letting. Merely holding property jointly does not constitute a partnership.
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