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Paying Taxes If You Live on a Boat

By: Thomas Muller - Updated: 19 Oct 2017 | comments*Discuss
Paying Taxes If You Live On A Boat

Living “off-the-grid” as a live-aboard frees you from many of the tiresome responsibilities of modern living but are you still tied up by local taxation?

Taxing Grey Area

If your boat is your main residence then the question of whether you are liable for council tax can be a confusing one; ambiguous laws mean that while some live-aboards have to cough up their taxes like everyone else, others seemingly get away scot free.

Or do they? Even if, as a live-aboard, you are not liable for direct taxation, you may still be making your contribution indirectly via alternative charges.

Mooring Taxation

The source of the confusion can be traced back to the Local Government Finance Act 1992. According to Section 3, council tax is levied on domestic property, and while a boat can be considered as a domestic dwelling, it cannot officially be classed as a “property”. Instead it is an asset or possession, regardless of whether an individual chooses to live in it or not.

Any tax liability occurs not with regard to the boat itself, but the mooring the vessel occupies. If planning permission for permanent residential use has been secured on a mooring then it can be levied for council tax, but who actually pays the tax depends on whether you have exclusive occupancy of the mooring or not. If the mooring is yours alone then by rights you should be footing the bill. Many live-aboards mistakenly believe – or want to believe – that by living on a boat they must be tax exempt and avoid raising the issue with their local council. Whether they are eventually taken to task for their oversight depends on the conscientiousness of their local authority, which can vary significantly in this matter.

Given that the tax liability relates to the mooring, the council tax you pay is levied on the value of the mooring rather than that of the boat. Most residential boat moorings are consequently in council tax band A, the lowest band. There are some instances in which a permanent boat mooring is liable for council tax levied on the value of the mooring together with the value of the boat, but never exclusively on the value of the boat. These usually apply to purpose-built houseboats or any boats that are moored with a “sufficient degree of permanence as to be enjoyed with the mooring”.

Non-Exclusive Exemption

If the mooring has planning permission for residential use but is not occupied by one boat exclusively (such as at a marina where there are no allocated moorings), and boats can moor up wherever is available at that time, then the occupancy of the mooring is deemed “non-exclusive” and as such is not permanent enough to be liable for Council Tax. In these instances the operator usually covers any taxation liabilities that may arise.

This taxation loophole is exploited by some live-aboards that occupy permanent non-exclusive moorings who disingenuously claim in their mooring agreement that their berth can be used by other vessels whenever they are away, thereby legally transforming their mooring into one that is non-permanent and non-exclusive – and council tax exempt.

Indirect Payment

The grey area of waterborne council tax liability has led to a popular misconception that live-aboards are all tax dodgers and therefore shouldn’t benefit from local authority services. Even if a live-aboard is not liable for paying council tax through their mooring they nevertheless still likely make a contribution – albeit indirectly – through their British Waterways (BW) licence and mooring fees.

For instance, BW pay the government a combined tariff for Council Tax and business rates and boat users contribute to this levy through their boat license fees and, if appropriate, mooring charges.

If you avoid paying Council Tax directly through occupying a non-exclusive residential mooring then the operator will probably be paying Council Tax as part of their business rates they pay to the authorities, and these costs will be reflected in the mooring fee you pay. The boat licence fee directly covers the use of water, sewage, rubbish disposal and recycling facilities provided by BW. Depending on the value of the mooring, there is also the possibility of paying either value added tax (VAT) or corporation tax (CT) as part of the mooring fee. Whether you are charged VAT or CT depends on whether you have an engine or not, respectively.

What this means is that if you are paying for a BW licence and renting a mooring upon which business rates or Council Tax are being levied then you could in fact be paying the local authority twice over.

So ultimately it would seem that rather than it being easy to dodge paying taxes as a live-aboard, the opposite is in fact true – it’s actually very hard to avoid paying.

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[Add a Comment]
You said: "Depending on the value of the mooring, there is also the possibility of paying either value added tax (VAT) or corporation tax (CT) as part of the mooring fee." Really? ... in reality (not your fantasy land) the only 'body' that pays Corporation Tax is a limited company, and then only on its profits. What a stupid article. No person can be charged Corporation Tax - get your facts right!
Incorrect Facts - 18-Aug-17 @ 2:27 AM
Hello I am a member of a boat club. The club is run by a committee who are also members and volunteer to be a committee member. There is no residential moorings it's just purely for leisure. I'm investigating a situation whereby a member is trying to cirumfrentiate the rules. They are living on their boat and they are saying because they are not there every night and spend sometime away from the club they they aren't officially living at the club. It's difficult to police because no one individual member is at the club, people are coming and going all the time. Does anyone have an answer or can point me in he right direction. The club does not pay council tax, we pay privately for rubbish clearance etc.
Jacqui - 7-Aug-17 @ 8:28 AM
Hello, my husband and I are going to be living permanently on a narrowboat in a British Waterways marina at an official residential mooring.Can anyone tell me approximately how much it will cost in Council Tax fees? Boat value £55,000, length 57'. Thanks
Confused about Counc - 21-Feb-17 @ 12:13 PM
This is a good article however it is slightly disingenuous to claim that because people may pay a BW license and Council tax for a mooring they are effectively paying twice because BW pays council tax and business rates. By that reckoning, people that rent a house whose landlord pays council tax are paying twice and people who use any business in the UK are paying twice because the vendor presumably pays business rates. This issue does need to be cleared up - either to make the boats exempt explicitly or for the council to tax them but provide enhanced services in return, however it is unlikely to be settled any time soon.
Mel - 18-Aug-16 @ 10:11 AM
Hi, my wife and I liveaboard we have a mooring provided by Essex waterways who are my employer. I am a caretaker contracted to work 8 hours a week made up of general duties including grass cutting the sale of canoe licences. My job description includes the security of other moored craft and checking in campers at a small camp site.The pay is modest as you can imagine, our mooring fees amount to £4000 per annum including VAT as our boat is a 57' wide beam. My question is regarding taxation; we currently pay VAT on our mooring fees and we also pay council tax rated at band A. According to HMRC our mooring fees are subject to VAT because the craft has a functioning engine ie not a house boat. As my employment is conditional on me living on a vessel on our designated residential mooring 24-7 I was wondering if anyone has any experience on claiming tax relief on either our mooring fees or boat maintenance costs?. As we are paying both VAT on our mooring AND council tax ,which seems a bit unfair
fozzy - 14-Jul-15 @ 9:45 PM
I am retired and have a dream of living on the canals for about two years before I get too old to enjoy it. My plan would be to obtain a suitable boat to live on for quite lengthy periods interspersed with a variety of cruises. I may have found a suitable boat but obviously cannot buy without obtaining a much closer mooring first, or so it seems. A dilema. Needless to say I am arranging to Let my house for the said 2 year period meaning that I would effectively be onboar most ofthe time weather cruising or not. Any suggestions please?
Ron. - 20-Aug-12 @ 4:33 PM
We are interested in living on board for wintering over a boat. As a boating couple we are keen on returning to France for a maximum of 6 months from say November to April at either the Arsennal Yatch Club in Paris or either the moorings at Saint John de Lone, Auxonne or Saint Useage. We are happy to contribute to costs including utilities. We have local references and carried out these duties as recently as 2009/10.
Gaz - 30-Jul-12 @ 6:10 AM
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