Closing holiday let, can I charge friends to stay afterwards?

ellie99

I wasn't sure where to post this, but the tax section seems most relevant.
I run a successful holiday let, and I'm planning for various reasons to stop at the end of the tax year. It may not be the best move financially, but I'd like to keep the flat for probably a couple of years before I sell. Financially, I should probably have sold in 2021, hindsight's a marvellous thing! 

So from April next year I will be letting family use the flat on occasion at no cost (they will only pay for electricity used). However, I have a couple of good friends who may ask to use the flat, and I would want to charge them something, albeit not the going rate. My question is - if I charge friends do I have to still keep records and tell the HMRC by filling in a self assessment return? I'd really like to relax and not have to keep detailed records for HMRC. 

I'm not trying to avoid paying tax, I would definitely not owe any tax as my annual income from next April will be approx £5300 per annum plus some savings interest, so well below my personal allowance. I know if I was paid in cash no-one would know but I don't want to look like I'm doing something underhand. Also, I have some very nice guests who visit every year, if I gave my details to just one or two couples, would that be okay?
The buildings insurance arranged by the management company includes public liability, so that is covered.

Any tips, advice or experiences welcome.

theoretica

Would the £1000 small enterprise allowance be enough to cover you?  This is total money received, not profit. You would need to keep enough records to show that you were below this.

Jeremy535897

theoretica said:

Would the £1000 small enterprise allowance be enough to cover you?  This is total money received, not profit. You would need to keep enough records to show that you were below this.

The property allowance is what is claimed in respect of furnished holiday lettings, but it too is £1,000.

ellie99

Thank you both, I'll read up about both of those allowances. I had heard of the property allowance but had completely forgotten about it.

tightauldgit

If you want to be above board then yes you'll have to do a self assessment. Honestly its not that big a deal - and if the income is small enough you may not even need to bother claiming any expenses so wouldn't need to worry about record keeping other than the income.

Jeremy535897

ellie99 said:

Thank you both, I'll read up about both of those allowances. I had heard of the property allowance but had completely forgotten about it.

You can't claim both against the same source of income. Property allowance is what matters. If you keep your receipts from property below £1,000, that will not be a reason to have to complete a tax return. If your receipts from property are below £10,000, and your rental expenses exceed your rental income, that is not a reason to have to complete a tax return either.

ellie99

Jeremy535897 said:

ellie99 said:

Thank you both, I'll read up about both of those allowances. I had heard of the property allowance but had completely forgotten about it.

You can't claim both against the same source of income. Property allowance is what matters. If you keep your receipts from property below £1,000, that will not be a reason to have to complete a tax return. If your receipts from property are below £10,000, and your rental expenses exceed your rental income, that is not a reason to have to complete a tax return either.

Sorry Jeremy535897, I meant I'd read up about both allowances, not that I'd try to use both! I did not know the bit in bold above.
I'm now thinking I will just keep records. If I did have to report on a self assessment return it wouldn't be under furnished holiday lets, as I'm not advertising so wouldn't hit the FHL criteria.

Jeremy535897

If you use this checker, you will see whether you need to complete a tax return:
https://www.gov.uk/check-if-you-need-tax-return

If you are asked to complete one, you must do so, whether you have any taxable income or not.

lincroft1710

Presumably the flat is assessed for non domestic (business) rates rather than Council Tax. If so the rules on holiday lets and business rates are changing from 1 April 2023 

https://www.gov.uk/introduction-to-business-rates/self-catering-and-holiday-let-accommodation

This may mean the flat could be assessed for CT, which will be far more expensive than business rates

ellie99

Thank you for the link @lincroft1710, I hadn't realised the rules were changing next year. If I don't sell immediately I've already factored in being assessed for council tax.

Sorry for the late reply, Saturday is cleaning and repair day.