A resident landlord – also known as a live-in landlord – is someone that rents out part of their home to a “lodger”, while also living there themselves. If you’re a resident landlord, you may need to submit a Self Assessment tax return by January 31st each year.
However, if what you earn from your lodger is under £7,500 a year, then you don’t need to declare it or do anything – unless you already registered for Self Assessment in a previous year and didn’t tell HMRC that you don’t need to file a tax return anymore. In this case, you need to submit one even if you don’t have any tax to pay.
If what you earn from your lodger is over £7,500, you can claim this amount as a flat allowance – this is called the “Rent a Room relief”.
Specify the basics, such as the length of the contract, when the rent is due and the notice period. The lodger’s licence can run on a month-to-month basis. It can go for a longer term with a break clause included. Decide whether to include the utilities as part of the rent or as a separate charge.
Resident landlords pay both Income Tax and National Insurance by filing a Self Assessment tax return, just like a self-employed business owner. However, if what you earn from your lodger is under £7,500 a year, then you don’t need to declare it or do anything.
If you are a landlord, remember to file your Self Assessment by 31st January the year after the tax year you’re paying for. For example, if you’re paying your 2023/2024 tax return, this should be paid by 31st January 2025.