Holiday let - need advice on tax

73Jonathan123

Hi,
My partner and I have spent the last two years doing up the cottage semi detached with ours. It is small but ours and we got it on airbnb this month where we've had a few bookings already. I have no idea about what to do when it comes to tax return time though. Does anyone know if its possible to get an appointment with an accountant just to pick their brains on such matters? If so does anyone know of specialist accountants for holiday lets? ( preferably in Glasgow or thereabouts) Or are there any good online resources? I am employed full time so would not normally have to fill in a tax return. I had thought I could put down all expenses and not have to pay tax against them but have been told I may be able to claim tax back for all the money I have spent in the last year getting the cottageup an running. Any advice is welcome. I don't want to have to hand all my earnings over to the tax man when we have put so many hours of effort and every penny into it.

G_M

Start with your own research then decide if you need an accountant.

https://www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment-helpsheet/hs253-furnished-holiday-lettings-2015

http://www.which.co.uk/money/tax/guides/tax-on-property-and-rental-income/how-rental-income-is-taxed/

https://www.gov.uk/renting-out-a-property/paying-tax

http://www.wiseandco.co.uk/Furnished-Holiday-Lets-Tax-Relief.html

Prothet_of_Doom

So you tell the HMRC you started a business. and you register for self assessment. Which will require you to make a submission by Jan 2018 for this tax year.
Put 1/3 of all sales in an account to pay the tax.
You keep records of everything you spend.
You keep records of all your sales.
Sales minus costs = Profit.
Pay tax on Profit. If you are lucky the 1/3 you saved will be more than the actual tax you pay. Bonus time.

agrinnall

Prothet_of_Doom wrote: »

Put 1/3 of all sales in an account to pay the tax.

That seems far too much, even if there are no expenses so all income is profit 1/3 would more than cover the tax. Given that it's highly unlikely that there won't be any qualifying expenses I'd say 1/4 of sales income would be plenty.

Rain_Shadow

agrinnall wrote: »

That seems far too much, even if there are no expenses so all income is profit 1/3 would more than cover the tax. Given that it's highly unlikely that there won't be any qualifying expenses I'd say 1/4 of sales income would be plenty.

The OP does work full time as well so all the profit could be chargeable at a marginal rate of 40%.

I agree 1/3 is probably generous though.

It may well be worth chatting with an accountant as well to see what other things apart from direct expenses you may be able to claim, use of home as office for instance.

AdrianC

If you've been spending on it for the last two years, then this is money you could have been claiming as a business expense for all that time. You really do need to talk to an accountant to see if you can bring those expenses forwards to the current tax year.