return the relief to its original purpose. The government is also concerned
more widely with encouraging the use of longer term lettings in the PRS.
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3.7 However, we found no evidence that the length of a letting is an appropriate
proxy for the government to achieve its objectives for rent a room relief. For
instance, letting arrangements such as Monday to Friday only lets, or
accommodation provided for attendees of a three-week language course or
summer school, would also fall below the 31 consecutive day count –
despite reflecting the spirit of the government’s objectives for the relief.
Many respondents also discussed the need for flexibility for both parties, for
instance where a self-employed person is taking on a short-term contract.
3.8 The government accepts the argument that a test within rent a room relief
based on length of tenancy would create unnecessary complexity within the
rules, and would not meet the original objectives of the relief.
A shared occupancy clause
3.9 There is an opportunity to clarify the purpose of rent a room relief and
ensure it is better targeted to achieve its original objectives. Specifically,
evidence suggests that there are landlords benefitting from the relief even
where they are letting out whole properties. The government agrees with the
view articulated by some stakeholders that such activity is inconsistent with
the original purpose of rent a room relief.
3.10 Those letting out whole properties are typically doing so for different
reasons, in different circumstances, and are operating in a different market
to those letting out spare rooms in their main homes. Generally, those
letting out spare rooms are doing so in order to generate small amounts of
additional income, and do not see the activity as their main source of
income. Those letting out whole properties will typically receive higher levels
of income, let those properties out for a longer period of time, and may
often operate more like commercial landlords. In those circumstances, the
government considers it more appropriate to treat such activity under the
normal rules for taxing property income.
3.11 To achieve this objective, the government intends to introduce a new ‘shared
occupancy clause’ for rent a room relief, which will require the individual to
be resident in the property and physically present for at least some part of
the letting period. Doing so will return the relief to its original purpose of
incentivising the letting of spare rooms (which otherwise go unused).
3.12 The government has considered whether doing so will introduce
disproportionate complexity into the rules, but believes that such a test
should be simple to administer as it creates a straightforward binary
distinction, rather than introducing questions of judgement.
Alongside this call for evidence, the government has published draft
legislation setting out how we intend the new test to operate in practice,
and will be consulting on the details of this legislation in advance of
introducing the legislation into Finance Bill 18-19 later this year. We
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The Ministry for Housing, Communities and Local Government (MHCLG), will shortly publish a call for evidence on overcoming the
barriers to longer term tenancies in the private rented sector. We would encourage those who are interested to respond to this.