Tax - where to begin?

[Dorothy128]

I am host fand let out my one and only property (while living and caring for my 97 yr old Dad) and thought earnings had to be over £11.5k before you paid tax. I've recently been taken off council tax, moved onto Business rates, setup direct debit to pay for water and waste and am now being hit from All angles to do this, that and the other. Am happy to pay tax if I am supposed to, but what about historically? Anyone else have a similar experience? I really don't see myself as a business,  but seemingly its either one or the other. 

[Jacob244]

Hi Dorothy,

Not an expert by any means and happy to be corrected. It's my understanding that if you're in the UK you need to file a self assessment tax return for any income you receive from Airbnb (this is what I do anyway). Alongside the full self assessment, there is a shorter form which you file if your income from self-employment (such as running an Airbnb) only forms the minority of your total income (i.e. the majority is PAYE). The form can be a little confusing at time, but Airbnb has a guide produced by E+Y which helps a lot. The guide can be found here if the link is not hidden : https://assets.airbnb.com/eyguidance/uk.pdf

[Mike-And-Jane0]

@Dorothy128 Also no expert but some thoughts.

It sounds like you are operating a Furnished Holiday Let so it needs to be available for 210 days a year and let for 105 (could be slightly wrong with numbers) or you will not qualify for small business rates relief.

As a Furnished Holiday Let you can take mortgage interest as an allowable expense along with heat, light etc.

As an FHL if you are married you can allocate the revenue to either or both partners as best fits your tax profile

You will have to pay National Insurance - starts much lower than Income tax

When you come to sell the property Capital Gains tax may be payable for the proportion of the time the house was let.

[Dorothy128]

Thank you Jacob, Mike & Jane. This is my first time using the Community Forum so well chuffed to get replies. I have been researching this subject for days now and glad to hear the confirmation of the amount of days you can let/make unavailable. I own my house outright, am not married. When my Dad goes into the next world, I will definitely sell my house and buy another. Not happy to have to pay tax on sale of my house. May I just ask if you have set yourselves up as a small business ? I really dont want to do that but will indeed be sending in a tax form. Surely you can pay your taxes without starting a small business? I am a Carer first and foremost. Best regards, Dorothy 

[Jacob244]

@Dorothy128 

I have mine set up as a business. I think the main benefit of this is that it removes the need to to pay council tax - if the rateable value of the property is below £12,000 (which most Airbnbs are probably well below, with possibly the exception of large places or those in London perhaps?) it will be eligible for a 100% small business rate relief. I believe that the vast majority of Airbnb's in the UK would be eligible for a 100% reduction in business rates - however it depends on the rateable value that your property is deemed to have. It's a big help for more modest places where council tax is a sizeable expense. Bare in mind that if you register your property as a business, it comes with restrictions on the amount of time you can use the property for yourself - it needs to be available for rent for a certain amount of days a year etc. Once You can also get a refund on any council tax that you've paid during the time you've been running the property solely as a FHL.  Again, not an expert - happy to be corrected!

EDIT : Sorry my bad - forgot you'd already mentioned you'd been moved off council tax!

[Mike-And-Jane0]

@Dorothy128 We haven't set up a business as it doesn't seem worthwhile (but thats a decision based on ignorance of the benefits). You just need to ask HMRC to send you a tax return and then fill out the section on rental income.

Re paying CGT on the sale of the home - I think they take the value increase since you bought it, pro-rate this for the time you were renting it and then charge CGT on this amount. I think there is some sort of relief (or lower rate - not sure) and also you will have your CGT allowance.

[Dorothy128]

Hi Jacob, Mike and Jane,

Thanks so much for your help and advice.

I am a bit further on in my quest to appease the tax man and have until 5 Feb ‘21 to do so (that’s for 2018-19, by the way).

I have another question for you and I know that Mike and Jane are not registered as a business but do you both have business accounts set-up for your Power Suppliers  (oil&gas)?

I was coerced into 5 year business accounts for both gas and electric with separate companies and they are asking for my Company details- site address, company registered number, etc and I am flummoxed. I thought I might put in Airbnb as Company name and my address will be the site address. Another ‘by the way’ (I’m from Glasgow, by the way 😆) my Airbnb property is tiny, i.e. business rate value £1,600 and is ~60 square meters squared in size. Profits are pretty small but then I do have my Carers Allowance to consider and I may lose this entitlement. I would happily squirm out of any association as being a registered business.

Hope you are all keeping well and that business is booming !

Many thanks and warm regards,

Dorothy.

[Gillian57]

Hi Dorothy, I am a bit of a pickle with the tax man and need an accountant in Glasgow, I see you are also in Glasgow, can you recommend anyone?  Did you deal with HMRC directly?