How much is taken in tax

L1011 wrote: »

I don't see how Revenue can provide this advice when it is clearly a service and hence included in the 14k cap.

At best it leaves people at the mercy of the opinion of an individual tax inspector which is not vaguely safe

4ensic15 wrote: »

I would like to see this written advice. Revenue issue guidance notes generally and don't offer hypothetical advice on these situations.

It’s quite surprising that people are seeing allocation of utilities as being counted towards the €14k.

It’s defined as being your income before your expenses. Money going to ESB for example is the ESBs income, not yours. Where you provide a service e.g. dinners or laundry, and charge for that, this is income. As you can’t deduct expenses under the rent-a-room scheme, then it’s the full income and not your profits.

I was quite clear from the guidance that I didn’t need to count it, If the intention was to include bill shares, Revenue would have said so outright in their examples. but given the conflicting online advise on this, I decided the safest thing to do was confirm my understanding with Revenue.
Here is extract from the correspondence I had with Revenue. (edited only for names)

Revenue online service wrote:

YakerK
The money for bills used to pay the bills does not have to be declared as income under the Rent a Room Scheme.
Regards
[Name]
PAYE Service for Compliance
Galway

me wrote:

05/01/2018 14:26
Hi, I have a query relating to rent a room relief. I am looking to declare income that I received in 2017 under this scheme. I am unclear if money received in respect of utility bills should be included in this. For clarity, these are passed directly on to tenant who then pays an equal share of the bill. E.g. If I received an ESB bill for ?100 - it'd be split 50/50 between tenant and myself. The bill is in my name though so he would pay the ?50 to me rather than directly to the ESB. Section 5.2 of https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-32.pdf makes clear that where services such as cooking or laundry is provided the income must be declared, however it's not clear to me if that would include allocation of bills where I am not providing a service myself. Regards, YakerK

If anyone doubts this, best thing for them to do is to check directly. I don’t know why people are so adamant on here when they haven’t taken steps to confirm if they are right or wrong. I didn't assume that my interpretation was correct on this one, so I asked the relevant person and now I know the right answer to this.

Personally, I’d advise against putting bills in name of a licencee. Remember they are not a tenant, so can walk away at any time leaving you with the headache of not having your name on the bills for your own house.

It is also unnecessary given how this actually works, but even if it were to be the case that Revenue intended to count bill shares towards the income – I think they would be wise to scams like this and discount it leaving you with potentially a tax bill should you go over the €14k

I would never class electricity as a similar service to laundry, meals or cleaning to be honest.

If that was to include esb bills, why would revenue wouldn't just list utility bills along with laundry etc to avoid confussion?

By any logic electricity is not a service provided by landlord. Of course better to be safe than sorry and ask at source.

Because Revenue call centre staff are far from infallible (indeed, in the case of LPT, they're usually just outright wrong) and most people do not see the interpretation of the legislation that you do. And its clear that in both cases it has just been call centre staff replying.

The original 12k and then 14k limit was designed to be an incredibly generous allowance. It is obvious that the intent of the legislation was for it to cover everything. Some interpretations may be different but you are reliant on the whims of an inspector if audited. It is still dangerous for people to trust advice given to a third party, particularly by a call centre operative.

Peregrinus wrote: »

The issue we're discussing here, though, is not whether the contribution to the ESB bill is "income" in the hands of the householder, but whether its a "relevant sum" which counts towards the 14k limit for determining whether the arrangement comes within the rent-a-room scheme or not. If the total of all the "relevant sums' exceeds 14k then you are not within the scheme, even though your actual taxable income (in respect of letting out the room) may be less than 14k. It seems to me (from the extracts you quoted) that your correspondence with the revenue focussed on the question of whether the ESB contribution was income, and didn't directly address the question of whether it was a "relevant sum".

Relevant sums are "all sums arising in respect of the use for the purposes of residential accommodation, of a room or rooms in a qualifying residence". A contribution to the household electicity bill that you pay because you lodge in a room in the house looks pretty clearly to be a relevant sum.

None of that is right, the revenue clearly talk about income and what qualifies as income in this case.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

YakerK wrote: »

None of that is right, the revenue clearly talk about income and what qualifies as income in this case.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/index.aspx

Yes, I know, but that's just a summary of the legislation, which I quoted, and summaries are inevitably simplified and don't include all relevant details. The legislation, of course, prevails over the summary.

Furthermore, if you follow through the link on the word "income", you'll find an explicit statement that "income" from renting property "service charges for services connected [to] the tenant occupying the property". So if you're passing on a service charge for electricity, that's both a "relevant sum" as defined in the legislation, and "income" as referred to on the website.

An electricity supply is a service. If the charge you make for the room includes an amount in respect of the electricity supply, that's a service charge. I think on a strict analysis, since it's part of the amount the lodger pays in return for his lodgings, it would be income assessable under Sch D Case V, but you'd get a corresponding deduction for the amount actually laid out in securing an electricity supply for the lodger, and it would all come out in the wash. All of which means that, strictly speaking, the amount the tenant pays towards electricity (or other services) should count towards the 14k limit.

But I accept that you have the correspondence you have with the revenue and, although it doesn't directly address the "relevant sum" issue, I think it will cover you - the revenue will accept that you sought to clarify the position, and any lack of clarity in their response is something they will take responsibility for. But as far as the revenue is concerned it's private correspondence between you and them; no other taxpayer can rely on it. Others in your situation should make their own enquiries, and I suggest should explicitly ask the revenue whether contributions to household utility bills are relevant sums which count towards the 14k limit.

L1011 wrote: »

Revenue would not agree with you

Any bills of any description are part of the 14k

You are wrong, the section pointed out to does not refer to utilities

"Any amounts arising
for meals, cleaning, laundry or other similar goods and services that are incidentally"
A utility is not a service provided by the householder.
Its a shared living expense, now if they were trying to charge over the odds that might be deemed a means to try extract income.
meals cleaning and laundry are services which the homeowner might provide are included, the provision of electricity or gas utility is not one which the homeowner could provide and are in no way a similar service to providing meals or ironing.

L1011 wrote: »

I don't see how Revenue can provide this advice when it is clearly a service and hence included in the 14k cap.

At best it leaves people at the mercy of the opinion of an individual tax inspector which is not vaguely safe

It is clearly a utility and not a service, not one provided by a householder. ANd that is why revenue are giving that advice, your interpretation is a mile off.

L1011 wrote: »

Because Revenue call centre staff are far from infallible (indeed, in the case of LPT, they're usually just outright wrong) and most people do not see the interpretation of the legislation that you do. And its clear that in both cases it has just been call centre staff replying.

The original 12k and then 14k limit was designed to be an incredibly generous allowance. It is obvious that the intent of the legislation was for it to cover everything. Some interpretations may be different but you are reliant on the whims of an inspector if audited. It is still dangerous for people to trust advice given to a third party, particularly by a call centre operative.

Its your own interpretation, for a start, the original was never 12k it was 10k, but you are incorrect the original intent never specifically covered "everything", if that was the intent it would be available to see, and it is not, nor has ever been.

4ensic15 wrote: »

Two people? One with a low post count who appears after the other was stopped from posting! Quotes from the Revenue that don't identify the level of official or quote from the legislation! Any opinion I have ever seen from the Revenue quotes the principal legislation and says how it is to be interpreted. I don't believe a word of it.

That original guy was right, and so is this following person, as am I, will I be accused of being one of them too?

A utility is also a service.

Splitting hairs to try find ways to avoid paying tax and/or relying on a call centre staff members interpretation given specifically to someone else are both not safe and could lead to paying tax on the whole amount and penalties for false declaration. And everyone who says bills aren't included is splitting hairs over definitions of "service" or "income" in a manner which is not always consistent

I'm saying that trusting a customer service answer (given in a quite confused manner) to a different taxpayer is not safe; particularly when it contradicts the obvious interpretation of the rules and relies on hair-splitting.

There is no legal comfort from advice given to someone else

Dav010 wrote: »

Its an unambiguous response, in written form, given by Revenue's customer service, I think the Revenue part of that is very important. Are Revenue in the habit of misinterpreting the tax system?

Revenue customer service staff are. They are call centre staff working off very limited info. Anything complicated is not guaranteed to get the same answer twice or match what inspectors would apply

4ensic15 wrote: »

Providing lights and switches and sockets for use is a service.

that's just being a smart arse.
and you are wrong.
that stuff forms part of the infrastructure of the building.

Gone mighty quiet in here.
L1011 care to back up your interpretations?
Or even answer the questions posed?

From the Revenue guidance notes.
https://psc.ie/wp-content/uploads/2016/07/A-guide-to-rental-income.pdf
"What if a premises is only partly let?
If part of a premises is let, only expenses incurred on the let part are taken into account in computing rental income. For example, if rooms are let in a private house and the income received exceeds the ‘Rent-a-Room’ relief limit “shared” expenses, for example, heating, electricity, etc., should be apportioned based on the occupancy of the house, i.e. the number of rooms occupied by tenants.

It seems to me that the shared expenses count as part of the income if deductions can be claimed in respect of them.

Mike3549 wrote: »

But what if a licensee has no cc or enough funds in bank acc and asks you to buy plane tickets or something else what isnt cheap and pays you back later, will this count as a "service"?
We are getting too much into details,
Id say if youre not sure and want to cover your a**, just double check with revenue.

That doesn't arise out of renting the room. It is a straight loand and might be done for anyone. Liability for a share of a bill arises because of occupatio of the room. The apportioment issue is also relevant. If there is one tenant in a 4 bedroomed house the revenue will only allow 1/4 of the bills to be apportioned.
The revenue would be vigilant in ensuring that the 14k cap is not circumvented by taking in undeclared money from bills on say a 50.50 basis when they think it should be on a 75/25 basis.