Renting out house to move closer to contract. Tax implications please?

[AnthonyQuinn]

I tried to find the answer in the stickies but I am sure some of you would have faced this scenario. Due to distance from the client site, I chose to rent out my house and move in as a tenant in a flat near the client site. The rent I am charging for my house and the rent I receive is approximately the same.

If I pay tax on the rental income from my house can I claim the rent paid on the other house as a business expense? Or is this another facet of this brutally exploitative tax regime that rental income earned is taxable and rental expense incurred is NOT tax deductible.

[SueEllen]

Why would your principle home, which is the home you are renting, be claimable as an expense?

You no longer live in the home you have a mortgage on as it is now a BTL.

[Fred Bloggs]

I see the OP's point but sadly I think from an expenses POV he's about stuffed. Try to claim everything as expenses you legitimately can on the BTL though, maintenance etc... to offset some of your expense of running the BTL.

[LisaContractorUmbrella]

In these circumstances you would not be able to claim the rental costs as, by renting out your main property, you have incurred no additional costs from performing the contract. If you had chosen not to rent out your primary residence you would be paying for 2 properties at the same time and therefore the rental of the second place would be an additional cost and therefore claimable.

[lje]

You may not end up paying much tax on renting you house out though:

• You can allow all of the interest you pay on your mortgage against the rent before you calculate profit.
• If you rent the house out furnished you can allow another 10% of the gross rent against tax before you calculate profit.

Don't forget that you need your current mortgage company's permission before you can rent your house out - they may charge for that. All of these charges can be taken off the rent before you calculate tax.

As others have said you can't claim anything on the rent will be paying.

[xoggoth]

Don't claim any expertise but renting out own property means you can't claim any rental close to contract? If one only rented and simply moved, true, as is no extra cost, but BTL still has costs and tax implications. One is not removing costs of morgage etc, only finding a way to offset them. If you claimed a council tax reduction due to it being empty would you be expected to deduct that form your rent? I don't think so.

is it not covered by EIM31815?
"Once it is accepted that the employee has incurred allowable subsistence expenses you do not need to take into account the costs
saved as a result of the business travel"

Definitely one for taxation web or accountingweb in my view. Not that a question there gets unanimous views, if only we had a clear tax system.

[lje]

Don't claim any expertise but renting out own property means you can't claim any rental close to contract? If one only rented and simply moved, true, as is no extra cost, but BTL still has costs and tax implications. One is not removing costs of morgage etc, only finding a way to offset them. If you claimed a council tax reduction due to it being empty would you be expected to deduct that form your rent? I don't think so.

is it not covered by EIM31815?
"Once it is accepted that the employee has incurred allowable subsistence expenses you do not need to take into account the costs
saved as a result of the business travel"

Definitely one for taxation web or accountingweb in my view. Not that a question there gets unanimous views, if only we had a clear tax system.

It's the 'wholly and exclusively for business' test which is failed here. If you keep your home for your use and also rent somewhere close to the gig then you can argue that the rented place is only used for business purposes. However, if you do not have another home to go to when you are not working then it fails that test as it is then your main home.

[THEPUMA]

Have you considered your eligibility to claim relocation expenses of up to £8K tax free? See HM Revenue & Customs: Income tax and National Insurance contributions on relocation packages.

[lje]

Have you considered your eligibility to claim relocation expenses of up to £8K tax free? See HM Revenue & Customs: Income tax and National Insurance contributions on relocation packages.

The only problem with that is that the OP would need to be starting a new job - rather than a new gig.

<edit>At least that's the implication of some of the notes. Not sure it's explicitly specified though...</edit>

[THEPUMA]

The only problem with that is that the OP would need to be starting a new job - rather than a new gig.

You can qualify for the exemption if

you have to move home to
...
- continue your current job but at a new location