HMRC AirBNB Tax Query

safara

Hi All


My wife and I started renting out the annexe bit of our house periodically using AirBNB in June 2019.


We dont expect to make more than £5000 by the time this tax year ends this March.


But, we do need to submit a self assessment effort with HMRC etc. And worth getting into the swing of this, as it may be the case that in subsequent years we would let it out more and therefore make more money from this.


A question though on the best way to do this.


I currently work a day job and pay my tax through PAYE.
My wife in not working, and has not worked for around 2 years now. She may get another job soon, but for now working on her not having a job.


Do we :-


a. Transfer her Marriage Tax Allowance to me, and I submit the self assessment for the extra AirBNB earnings?


or


b. We run the AirBNB as her income, and she submits a Self Assessment for that income, leaving me with just the single income from my day job taxed through paye?


or


c: Does it need to be some sort of joint effort?


Would welcome your thoughts


Cheers :beer:

csgohan4

There is info on rent a room scheme which allows 7.5k tax free

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

how do you own your property? joint tenants or unequal shares? This will dictate how you can split the income

safara

Many thanks for the reply csgohan4


I have read about the 7.5k scheme - which is great!


We are joint tenants...


So, both submit an assessment, declaring 50% each? And the same with any costs and so on?

BoGoF

What do you mean by an 'annexe'.....depending on the answer rent a room may not apply to you.

safara

Hiya Bogof


The end of the house has an En suite room with it's own external entrance - and a internal connecting door to the rest of the house. All sharing the same lecky, heating etc.

Pennywise

You need to read the detail re the rent a room scheme. You don't say how separate it is - does it have its own kitchen & bathroom? Do the occupants have access to the rest of your home? Does the annex have its own Royal Mail address i.e 12 and 12a? Does planning permission allow for it to be independent/separate from you? For rent a room relief, it needs to be them living in a room as part of hour home. If it's actually a separate annex with little/no access to your "home" it may not apply. The devil is in the detail.

safara

Hiya Pennywise


It is ensuite - with a shower/toilet. We use the space when guests are not in, it is the downstairs loo, but close the door when guests are in. They have the use of shared spaces like parking and garden etc.

It it all part of the same house so same address, not seperate from us, a ground floor room of a 6 bedroom house, just with it's own external door.


I read the Rent a Room scheme as this should be OK for that relief.


But very happy to be corrected!

Retired_Mortgage_Adviser

From what you have said, Rent-a-room definitely applies.

If the income is below 7,500 (3,750 for each of you to be precise as you own the home jointly), you don't need to do anything more. It doesn't matter how much your other earnings are. If the rent-a-room income is less than £7,500 per year you do not have to inform HMRC and you do not need to complete a self assessment tax return, unless you already do so for your other income.

safara wrote: »

So, both submit an assessment, declaring 50% each? And the same with any costs and so on?

If and when your income exceeds 7,500, you have to declare it through self assessment and you have two options -

1. Pay tax on actual profit (rental income minus expenses)
OR
2. Pay tax on the GROSS income over 7,500.

Method 1 is automatic through your self assessment, method 2 requires you to opt-in.

safara

Many thanks for the reply Retired Mortgage Advisor


It is good to have it confimred that the



"The tax exemption is automatic if you earn less than the threshold. This means you don’t need to do anything."



from the .gov link, means excatly that - we dont have to do anything or submit anything.

Dazed_and_confused

You don't have to submit anything just because of this but if you are submitting a Self Assessment return anyway you may have to tick a box on the rental income schedule/page.

You do of course need to keep records so that if HMRC ever dispute things i.e. think you have taxable rental income you can supply figures in support of your view.