VAT for Hosts in the UK

[Gillian417]

Hi everyone,

I’m hoping that someone might be able to help.

We’ve had to VAT register our business due to being over the threshold. My question is, when doing the return, so we deduct the cleaning fee when we report income since this is not earnings? I’m finding the amount that we are charged versus what we claim back is massively out.

I’m hoping more experience hosts might be able to help?

Thanks so much

[Mike-And-Jane0]

@Gillian417 Cleaning fees are income as it would be too easy to just charge a massive cleaning fee and a low nightly rate to avoid VAT. If you are close to the VAT threshold you would actually be better off closing for  a period of time rather than charge VAT. 

[Mike-And-Jane0]

@Gillian417 Also I don't see a VAT charge on your listing. It might be worth doing as some guests might be able to reclaim VAT and so your place would become more attractive to them.

And another thought (BUT YOU NEED AN ACCOUNTANT FOR THIS ONE). If you co-own the property with a partner could one of you list for 6 months and your partner list for the other for 6 months thus keeping under the VAT threshold.

[Gillian417]

Really helpful, thanks. Do you know how I make it clear within pricing that VAT is included?

[Mike-And-Jane0]

@Gillian417 I suspect you need pro-tools switched on and then put your VAT number in and it might happen automatically. We don't charge VAT so I have never looked into it. I think there is a way of charging VAT at 15% and not being able to reclaim input VAT which would be worth looking at.

By the way do you qualify as a Furnished Holiday Let? If so and if you have a mortgage you can claim mortgage interest. Also earnings are pensionable which effectively reduces your tax bill