Tax on Airbnb for retired parents?

devonian20

Hiya

My parents are retired and have recently moved into a house which has a nice area of hard standing ground at the end of the garden with separate access. 

They asked me if they could possibly have a caravan on it and use it as an Airbnb. It had permission previously for a static caravan but I think they would choose a touring one for ease of moving if they want to later on. 

My question is around tax for Airbnb. 

Would they need to pay tax? I’ve read about you can avoid in some circumstances if you are renting a room, but unsure if that would count. Also as they are retired if they don’t go over the threshold to pay tax?! 

Thanks!

amanda1024

I think the rent a room scheme allows for £7,500 a year. This page suggests a caravan would count: https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001. But also, if they don’t have much other income they might still have some personal allowance.

p00hsticks

amanda1024 said:

I think the rent a room scheme allows for £7,500 a year. This page suggests a caravan would count: https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001. But also, if they don’t have much other income they might still have some personal allowance.

I'm not sure the reference to a caravan in that link relates to the proposed set up the OP is describing, but is rather for the case  where someone living in a caravan has a lodger. 

I'm not convinced that the situation the OP describes, where the inhabitants of the caravan would not be entering or using any of the facilities of the main residence, would qualify under the rent-a-room scheme, but that's just my inexpert opinion after reading the link .

devonian20

If it does not qualify for the rent a room scheme, would they still be able to earn up to £X amount from it before being taxed? 

lincroft1710

If they intend letting out the caravan as self catering holiday accommodation, I don't think the R-A-R scheme applies. They should check the planning status as the previous planning permission may have expired or may have been for a different usage.