Is Furnished Holiday Letting self employed?

hotb

Last year I inherited a house that was being let as a holiday cottage and have continued letting it. I told HMRC recently thinking I would just have to declare the extra income but they want me to register as self employed.

I have a full time job and all my tax is PAYE.

Do I HAVE to register as self employed to let a FHL property and if I have any choice in the matter are there any advantages to doing so?

The property meets all the HMRC requirements as FHL and is available all year round.

This year there will be a loss due to lots of maintenance etc. so I think I can get this back from my PAYE tax if I've interpreted the rules correctly?

Thanks in advance for comments and advice......

Tigsteroonie

Not sure about the registering as self-employed business .... When I was working and had a holiday letting cottage, I simply told the Tax Office that I wanted to be registered for self-assessment tax purposes. Then at the end of the year, I completed a tax return declaring what I had received from the job & paid as PAYE, and also on separate pages, what I had received from the let. I do recall that you could put some expenditure from the cottage against the tax, but I don't remember the details. Might be worth you finding the HMRC self-assessment pages for more details.

jimmo

Have you got this right?
Renting out 1 property is almost certainly not self-employment.
If your lettings do amount to FHL your profits and losses will be treated in exactly the same way as self-employed profits and losses but you will still definitely not be self-employed.
However, if like most full time employees, you are not in Self Assessment, the fact that you are letting will bring you into Self Assessment.
HMRC should be sending you a (Self Assessment) Tax Return to declare your 2007/08 income, profits or losses.

Penny_Rich

Furnished Holiday lettings is not self employment, but you do need to declare it on a self assessment tax return. There is a page for it - you will need the rental income pages, and i believe FHL is on the front page not the reverse.

It can be confused with self-employment, as it is treated as trading income for certain things. For instance, if you make a loss from FHL you can offset that against any other income during the year, including your PAYE income. If it was a normal private letting, then any losses get carried forward against future profits from the same rental source. Also, when calculating your income for pension contributions (Net Relevant Earnings), FHL can be included for that, whereas private rentals wouldn't.

You can claim expenses against the rents received, including costs of repairs. But if you have spent any time residing at the holiday cottage then you have to make an appropriate adjustment to your expenses claims. For example, if you had had two weeks holiday there in a tax year, then you can only claim for 50 weeks of expenses, so its the sum of your expenses x 50/52 that you would claim for.

Hope that makes sense.

mtem74

simple answer is no. It's no self employment if it;s just one property. 2 and they may think its a business