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Many people attempted to boost their incomes during the Commonwealth Games by renting their homes or other properties to spectators and athletes. Unfortunately, if you fall into this category, you may receive a letter from the taxman.
A sporting event over many days provides a fantastic chance to put unused rooms or houses to good use and create some additional income. However, HMRC is anxious to warn short-term landlords that rent from renting property is a taxable source of income. Furthermore, depending on the circumstances, you may be forced to sign up for self-assessment and disclose it to HMRC. Taxman has collected information about potential taxpayers from three different online booking sites, and it is now writing to those individuals to “make it as straightforward as possible to assist them to pay.” Getting a letter could look scary at first, but you might not realise that you have certain exemptions that exclude you from having to file any disclosures, even if the letter might make it seem like you do. If the property is not your primary residence, you can receive up to £1000 in tax each year without having to register as a tenant before you need to start thinking about it (or reporting the income if you already submit tax returns). This is because of the allowance for property rental income.
If you are letting out a room in your primary residence that is already furnished, you may be eligible for the rent-a-room initiative, which is an even better option. There is a potential exemption worth up to £7,500 (or £3,750 per joint owner if the property is held in shared ownership). Call us to see if you need to register for the self-assessment before you do it.