Sole Trader / Partnership for Holiday Lets

Abblybee

My wife and I are going to be taking control of a small holiday lets business (2 cottages registered for business rates) in the next few weeks; this is currently closed due to the virus but I expect revenue to be around 30k pa. That said we're going to be spending a lot to do up the cottages over the next year so profits will be offset for a few years. 

I am also in the process of starting a media business with a partner; this will be set up as a partnership. I can't see that making any profit until 2021. 

My wife doesn't work, so for the next year I presume the holiday lets will be our only income. 

With this in mind would be great to hear any suggestions as to whether I:
1) need to set up the holiday lets as a business at all, or can I simply register any profits in our self assessments?  I can't figure out if I need to register as the cottages are under business rates. 
2) set that up as a partnership with my wife. The reason for this would be so that we can split revenue against our personal allowances. My understanding is that we could also change the weighting of the profits later if I start to earn more through the other venture.
3) ...any other suggestions?!

ACG

You should speak to an accountant. 
Sole trader/partnership will mean incomes are taxed - if you expect to go over the higher tax rate with any other income, you might want to look at going limited. A ltd company means personal income is taxed and so are profits (seperately) and so that may be at a lower rate than the higher rate tax threshold...

Get the Rentals one wrong now and it will be a costly mistake as you would have stamp duty charges to deal with if you decide to change it down the line. You really should be getting professional advice, not randoms on the internet (and I include myself in that). 

Savvy_Sue

I agree, accountant, ideally one with a good grasp of HMRC guidance on rental income (and refurb costs!). I don't know if the rules for what you can and can't offset against tax for a holiday let are the same as they are for a 'normal' rental property, but it may not be at all straightforward. 

Abblybee

Savvy_Sue said:

I agree, accountant, ideally one with a good grasp of HMRC guidance on rental income (and refurb costs!). 

ACG said:

You should speak to an accountant. 

Thanks guys, we're on the same page and I'll defiantly be speaking to an accountant as well. That said I've learned there's many ways to skin a cat and there's also a lot of smart people on this forum. I've learned its always good to go into a meeting with a professional loaded with different perspectives and options to chat through!

Marcon

Abblybee said:

With this in mind would be great to hear any suggestions as to whether I:
1) need to set up the holiday lets as a business at all, or can I simply register any profits in our self assessments?  I can't figure out if I need to register as the cottages are under business rates. 

Whether you own the cottages as a sole trader, partnership or limited company isn't the deciding factor here. Business rates (rather than council tax) are payable if you make each cottage available for holiday lets for 20 weeks (140 days) or more in a year.