Do I need to pay tax or NI if I rent out my garden building as a live in property?

[happyhippydad]

Hello everyone.

As I get older and my back gets worse I realise I may not be able to work as an electrician until retirement (I am 50 now). Hence, i am looking at alternative ways to earn money to pay the bills.

I have a large 5.5m x 3.5m garden building (4m high) which I could do up as a self contained live in property for a single person.

My question is, do I need to pay tax or NI on this? Lets assume my income will be over the personal allowance.

You read all sorts on the net and I am a little confused. I realise you can rent a room in your house without having to pay tax. It feels like I would be bending the rules a little to try and sway this as a room in my house. However, it is a one room and it is in my home, just happens to be in the garden

Thanks in advance.

 

[Scalloway]

Official HMRC guidance on tax and rent.

Renting out your property

Landlord responsibilities when renting out your property, including making repairs, health and safety, increasing the rent and changing regulated tenancies.

www.gov.uk

Do you have planning permission for the conversion?

 

[kulture]

If you receive income from property then you have to pay tax on it. There are several schemes where you either claim back every expense to calculate your profit or just deduct a fixed amount. Either way it is added to your income and once you exceed your personal allowance you owe tax.

The rent a room scheme is if you take a lodger in your home, not for renting a garden shed.

You will need planning permission and you will need to ensure that the accommodation reaches certain standards. You could consider something like Airbnb so long as you have met the above requirements. Airbnb can bring in much more than basic rent.

 

[kulture]

You don’t have to pay NI but if you want a decent pension when you retire you should consider voluntary contributions

 

[happyhippydad]

Thank you for all the replies.
At present it is still a gym. This is purely if the back worsens in the future.
If it does, I shall seek planning permission.
However, it doesn't require planning permission at the moment as it meets the relevant requirements for size and distance from neighbours. I'm assuming the planning permission you mention is because it will be lived in?

 

[ecommerce84]

Yes, if a building is going to be used for “self contained living” then it will require planning permission, even if the properties size and location would ordinarily fall under permitted development.

As a separate dwelling to your main property it would, in all likelihood, become liable for council tax so you’ll need to make sure you have permission as it could be seen as council tax evasion if you don’t.

 

[macScot]

Hence, i am looking at alternative ways to earn money to pay the bills.

Consider making YouTube videos in your field of work or any exciting electrical projects or hobby stuff. Your garden building could become your studio.

 

[IanSuth]

Yes, if a building is going to be used for “self contained living” then it will require planning permission, even if the properties size and location would ordinarily fall under permitted development.

As a separate dwelling to your main property it would, in all likelihood, become liable for council tax so you’ll need to make sure you have permission as it could be seen as council tax evasion if you don’t.

In my part of Berkshire the council are proactively seeking out garden buildings that have been converted to living spaces and taking enforcement action