Charging son rent - tax?
Discussion
Our son is now 18 and has gone straight out post A-Levels to work. We have told him we are charging him 25% of his take home as rent. The idea is to pool this money and give it back to him to use as a deposit for a home when the time is right.
What are the tax implications here? Is it easier to just get him to put this money in to his own account or can we keep it and not have to pay tax either when he gives it to us or when we give it back?
Thanks!
What are the tax implications here? Is it easier to just get him to put this money in to his own account or can we keep it and not have to pay tax either when he gives it to us or when we give it back?
Thanks!
HMRC rent a room scheme @ up to £7500 a year (no tax)
https://www.gov.uk/rent-room-in-your-home/the-rent...
https://www.gov.uk/rent-room-in-your-home/the-rent...
Puggit said:
Our son is now 18 and has gone straight out post A-Levels to work. We have told him we are charging him 25% of his take home as rent. The idea is to pool this money and give it back to him to use as a deposit for a home when the time is right.
Did the same for my lads. After 8 years of paying rent, with no idea it was coming back when they were going to buy, it was a pretty helpful £40K+ lump of cash. TwigtheWonderkid said:
Puggit said:
Our son is now 18 and has gone straight out post A-Levels to work. We have told him we are charging him 25% of his take home as rent. The idea is to pool this money and give it back to him to use as a deposit for a home when the time is right.
Did the same for my lads. After 8 years of paying rent, with no idea it was coming back when they were going to buy, it was a pretty helpful £40K+ lump of cash. Good idea, in additional also get your son to set up a Lifetime ISA. You can put up to £3,000 in per year and the government tops up by £1,000. The funds can be used to buy a house or, if you have a house already and are under 40, you can open an account and save for retirement.
Seems free money your son so worth setting up if the purpose is to save for a house deposit.
Seems free money your son so worth setting up if the purpose is to save for a house deposit.
VeeReihenmotor6 said:
Good idea, in additional also get your son to set up a Lifetime ISA. You can put up to £3,000 in per year and the government tops up by £1,000. The funds can be used to buy a house or, if you have a house already and are under 40, you can open an account and save for retirement.
Seems free money your son so worth setting up if the purpose is to save for a house deposit.
Agreed although it's £4,000 a year not £3,000 you can put in. Seems free money your son so worth setting up if the purpose is to save for a house deposit.
I plan to take this approach with my kids as well, worked well for my parents.
PoorCarCollector said:
HMRC rent a room scheme @ up to £7500 a year (no tax)
https://www.gov.uk/rent-room-in-your-home/the-rent...
In addition when people charge their kids "rent" it's really a contribution to the general household bills. You're not taking them on a lodger/tenant. Most people I know call it "keep" not rent.https://www.gov.uk/rent-room-in-your-home/the-rent...
Same if a couple live together but one owns the property. If the other contributes to the household it's not rent unless it's a formal arrangement.
LastPoster said:
ARHarh said:
My parents charged me 15% of my take home, but never gave any of it back to me. They just spent it on holidays and stuff. Mind you it encouraged me to move out.
They didn't spend on food that you ate then?Both my sons give me 10%. It’s a token amount really as it doesn’t even cover the food 
but it’s about responsibility
In the same way I also encourage them to save in the most advantageous ways and take advantage of company pension contributions etc. All stuff that didn’t exist when I was their age (for me at least)
but it’s about responsibility In the same way I also encourage them to save in the most advantageous ways and take advantage of company pension contributions etc. All stuff that didn’t exist when I was their age (for me at least)
LastPoster said:
ARHarh said:
My parents charged me 15% of my take home, but never gave any of it back to me. They just spent it on holidays and stuff. Mind you it encouraged me to move out.
They didn't spend on food that you ate then?If parents need their kids rent to cover essential bills like for and utilities fair enough. But then they wouldn't be going on holiday. But parents who don't need the money actually charging their own kids for food and electricity, sorry, I just can't get my head around that concept.
By all means make them pay rent, but ultimately don't spend it if you don't need it. Save it for them to use in their first property purchase.
I don't charge my kids anything, however they both buy and prepare most of their own food. My son works shifts and my daughter only lives here 50% of the time so they are very independent of us as parents.
They are also both saving hard for their own properties so no need to use "keep" as a means to help them later.
If they wasted their money I might think different.
They are also both saving hard for their own properties so no need to use "keep" as a means to help them later.
If they wasted their money I might think different.
Edited by 98elise on Saturday 21st September 00:41
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