During the Commonwealth Games many people looked for an income boost by renting property to spectators etc. If this includes you, why might you receive a letter from HMRC?
A sporting event held over several days is a great opportunity to utilise spare rooms or empty properties to generate a bit of extra income. However, HMRC is keen to remind short-term landlords that rent from letting property is a taxable source of income and, depending on the circumstances, you may need to register for self-assessment and declare it to HMRC. It has obtained information from three online booking platforms to identify potential taxpayers, and is writing to them to “make it as easy as possible to help them pay”. If you receive a letter, it may appear worrying, but you may not be aware that you are entitled to certain allowances that may mean you don’t need to report anything. If the property is not your main home, you can receive up to £1,000 each tax year before needing to consider registering (or reporting the income if you already submit tax returns). This is due to the property allowance.
If you are renting furnished accommodation in your main home, you might qualify for the rent-a-room scheme which is even better. Up to £7,500 (or £3,750 per joint owner if the property is in shared ownership) can be exempted. So, before rushing off to register for self-assessment, check whether you genuinely need to.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.