My parents live in a house I have owned for 12 years and they pay me just enough money each month to cover the mortgage payments. I don’t currently live in the house. Would I have to pay tax on the money they pay to me? Is there any agreement or documentation I should have in place?

Arthur Weller replies:
Almost certainly HMRC would say that the money your parents are paying you is rent for living in your house, and as such is taxable income for you. Until April 2017, this would not result in you paying any income tax on the rent, because your allowable expenses (i.e. interest) basically equals the taxable income (i.e. the rent). But from April 2017, the rules have changed. If when this rent is added to your other taxable income in the tax year you do not go over the higher rate threshold (i.e. £50,000 for 2019/20), the receiving of the taxable rent will not result in you paying any more income tax because the tax credit you get for paying the interest (at 20%) will cancel the effect of the receipt of the rent. However, if the receipt of the rent pushes you into higher rates, there will be an actual difference in the income tax you have to pay.