If the pandemic that shall not be named taught me anything, it would be that you don’t need to be abroad to have a beautiful vacation. Whilst the airways were closed, many of us looked a little closer to home for our getaways, and maybe we fell in love, once again, with the UK, having forgotten everything it had to offer.
Having said all that … have I jetted off to sunnier destinations since? Absolutely yes! But that’s not to say that there aren’t still plenty of holiday-makers (myself included) who are looking for UK vacations.
And if you’re anything like me, the first place I will look to find accommodation is AirBnB, or similar home rental sites.
So what about renting out your place whilst you’re away?
What are the financial implications of doing so?
Well, there are plenty of nuances in rental law, so for the purpose of this article, let’s be clear that we are talking about the short-term let of your furnished home, in other words, vacation rentals.
If this is what you’re looking to do, you may be interested in the ‘Rent A Room Scheme’. This scheme‘’lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else. You can let out as much of your home as you want.’’ (taken from the HMRC website)
This scheme needs to be opted into, and will not automatically be applied to your tax return without doing so. But once you have done, that’s going to save you up to £1500 in tax! You will still need to complete a tax return as normal though.
As ever, there are a few hoops to jump through in order to qualify. The rental must NOT be:
- Used for any purpose other than accommodation (eg an office or event space)
- Unfurnished (therefore most likely for long-term tenants)
- Separate from your main home (such as a second property)
- Rented out whilst you live abroad
So, as you can see, the point of this scheme really does seem to be perfect for the AirBnB host. If you’re jetting off for a couple of weeks, and feel comfortable letting others use your home, then your vacations could be paying for themselves by renting your place out!
As a note, this scheme also applies to renting a room (clue in the name, right?), even long-term, to a lodger. Again, the important thing being that the property is still YOUR home.
As ever, this is just information and for personalised, specific advice, contacting an accountant to talk about your situation would be best.
Blog suggestion: ‘What Costs Can I Claim when Renting My Property Out Short-Term?’
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