Does holiday let income count towards turnover threshold for VAT??

taylor86

To clarify… if your self employed business is not holiday letting and is a separate trade then the 85k VAT threshold would apply to the business income only. Additional Income from another source will not contribute to this. Obviously it will contribute to your total income for tax though. 

Hope that helps! 

BlokkedSinkk

taylor86 said:

To clarify… if your self employed business is not holiday letting and is a separate trade then the 85k VAT threshold would apply to the business income only. Additional Income from another source will not contribute to this. Obviously it will contribute to your total income for tax though. 

Hope that helps! 

Thank you, yes it does help, you don't happen to have any official sources for this do you? I've looked everywhere and can't find anything, only stuff about how holiday lets are VATable which implies they are treated as a business... 

SonnyLumiere

Afraid I can't agree with taylor86. The following suggests a different view from HMRC:
https://community.hmrc.gov.uk/customerforums/sa/007ec5a0-a6c3-ee11-a81c-6045bd0c2f4c
Especially: "If your combined gross turnover from all your business ventures exceeds £85000, then you may need to register for a VAT account"

I would suggest asking an accountant, or logging into the HMRC community forum (per link above) for a more "official" statement. 

Slinky

The VAT registration threshhold is going up to £90K per today's budget if that helps.

sheramber

If you do a Google search for ‘ is holiday letting income liable VAT’ you will find several hits confirming that it does come under VAT liability. So if both incomes are added together as previously stated, then if the combined income goes over the limit you will be liable to pay VAT. 

There is a question on the HMRC  community for January 24 confirming this.

gazfocus

taylor86 said:

To clarify… if your self employed business is not holiday letting and is a separate trade then the 85k VAT threshold would apply to the business income only. Additional Income from another source will not contribute to this. Obviously it will contribute to your total income for tax though. 

Hope that helps! 

I disagree with this as the hmrc guidance clearly states it is the sole trader individual that the vat threshold is based on and NOT the specific business activity. So, as an example, if you had a food takeaway earning £40k, a decorating business earning £40k and holiday let earning £20k you’re over the £85k limit (£90k from April) so required to register for vat. 

One thing to note, your turnover is assessed on a rolling 12 month period and not your financial/tax year. So as soon as you hit the £85k over the last 12 months you need to register for vat. 

mybestattempt

Olinda99 said:

holiday let income and self empolyed income are taxed under completely different schedules

wages and salaried income are taxed under Schedule “E” and income from a trade or profession carried on by a self-employed person is taxed under Schedule “D” . Income which derives from the ownership of land and property is charged under Schedule “A” .

Not only does this fail to address the VAT issue the references to Schedules A, D and E are many years out of date.

The those Schedules were replaced by Property Income, Self  Employment Income and Employment Income when the relevant  income tax legislation was rewritten in the Income Tax (Earnings and Pensions) Act 2003 and the Income Tax (Trading and Other Income) Act 2005.

BlokkedSinkk

sheramber said:

If you do a Google search for ‘ is holiday letting income liable VAT’ you will find several hits confirming that it does come under VAT liability. So if both incomes are added together as previously stated, then if the combined income goes over the limit you will be liable to pay VAT. 

There is a question on the HMRC  community for January 24 confirming this.

I know that it's VATable, I've just been unclear on whether it's additive to my other totally separate business activities for the purposes of the VAT threshold - and the HMRC guidance seems to contradict itself about this which is probably why I'm getting different answers here! I will try to find the post you mention from the 24th on the HMRC forum. Think I need to get an accountant...

BlokkedSinkk

sheramber said:

If you do a Google search for ‘ is holiday letting income liable VAT’ you will find several hits confirming that it does come under VAT liability. So if both incomes are added together as previously stated, then if the combined income goes over the limit you will be liable to pay VAT. 

There is a question on the HMRC  community for January 24 confirming this.

Could you please link me to this post? I can't find it on the forum - it would be really useful. Many thanks

mybestattempt

VAT is chargeable on an entity, be that a sole trader, a partnership or a company.

If you operate as a sole trader then for VAT purposes as a 'taxable person' all taxable supplies are included whatever the source. So, if you have two or more sources these are aggregated to establish turnover for VAT.

The HMRC manual VAT Single Entity and Disaggregation maybe useful reading.