ESA (either New Style or Contribution based) and Airbnb income Scotland

Slonvinton

Im considering taking a lump sum out of my pension in order to set my house up as an airbnb. From what Ive read a lump sum should not affect my ESA (I hope Ive understood that correctly).

However Im trying to determine how it will be viewed once Ive moved out of the house and started to use it as a Furnished Holiday Let.

Im not sure if I will be considered self employed when I am doing this or not; Ive come across people saying you are not treated as self employed in England, but Im not getting anywhere finding out if it is treated as self employed in Scotland.

Im not well enough to do any of the work involved in letting myself so hope to pay for all the cleaning etc out of the airbnb income.Will any of the income thats generated be seen as earned income rather than rental income and how do these terms apply to Scotland?

It would be reassuring if I could keep my ESA when I start out as Im not really sure if this idea is going to fly; so Im a bit worried I might leave myself without income if trying this causes my ESA to stop at some point. I hope to rent a room at a friends house while things are getting going and after Ive learnt to drive I intend to get a camper van.

Newcad

Savings and income do not affect NS ESA (except income from pensions).

It will be income for Tax purposes and will need to be declared to HMRC.

Perhaps more important though:

Have you actually looked into the laws in Scotland as regards holiday letting a property?
It isn't something that you can just start doing on a whim.

You will need planning permission for the change of use to start with, and then a licence to be the landlord of a holiday let.
If it's available to rent for at least 140 days and is actually let for at least 70 days you will need to pay commercial rates rather than Council Tax.
I don't know what else applies in Scotland. (Any kind of property letting has different rules in Scotland and they are usually stricter).
All of that is going to cost money upfront before you make a penny from renting it out.

You need to take good advice, and legal advice too, about what you are proposing to do.
The penalties for letting out property that isn't authorised/licenced/compliant with regualations/etc. can be very severe.

PS. As a pensioner do you really want to be living is a cold camper van in a Scottish winter.
Sounds nice for a long touring trip in summer, but a very different prospect in winter.

Slonvinton

Newcad said:

Savings and income do not affect NS ESA (except income from pensions).

Working affects NS ESA though so it really matters if its considered "self employed" rather than "rental income". I cant seem to find the answer to this.

Newcad said:

Have you actually looked into the laws in Scotland as regards holiday letting a property?
It isn't something that you can just start doing on a whim.

Yes Ive looked into it. The council has a page on it on their website.

Newcad said:

All of that is going to cost money upfront before you make a penny from renting it out.

PS. As a pensioner do you really want to be living is a cold camper van in a Scottish winter.
Sounds nice for a long touring trip in summer, but a very different prospect in winter.

Thats what the lump sum is for; that and getting the place in a fit state to rent out.
Im not a pensioner technically, its just my pension pot matures when Im 55

huckster

Owning one let property is not self-employment, unless you were selling services connected to it.  For example, if you sold Insurance for each let that produced a profit.  You provided laundry services at a profit. You provided tour guides which you charged for etc etc etc. It is not the owning of a let asset itself, but any services you provided that would be counted as self-employed earnings. 

For New Style Benefits which are based on NI contribution records, capital savings and investments do not affect these benefits. Any let income you earn would count as capital and not earnings, therefore not relevant to a contributory based benefit. 

Slonvinton

Hmm the CAB are telling me it would be self employment and need to be done under permitted work rules. But the info they sent me was just about self employment nothing to do with rental income, so I think they may be just making assumptions.

The only thing I can find about rent and ESA on the CAB site is here ( https://www.citizensadvice.org.uk/scotland/benefits/sick-or-disabled-people-and-carers/employment-and-support-allowance/help-with-your-esa-claim/esa-how-much-you-can-get/ ) and its talking about deducting it from income based esa.

Can anyone point me to the legislation where it says rental income is disregarded or ESA dont consider renting one property self employment. Id like to know I can argue my case if I have to.

Tangent
On a related note does anyone know if airbnbing one room can still be done through the rent a room scheme if you are on Universal Credit and be disregarded as income.

Slonvinton

Ive just gone to one of those benefit sites and put rental income in both as "border" and "property income" and it hasnt affected my ESA amount in either case. I only tried one site but I will probably try the others as well (as thee might be more info somewhere).

Which supports what Im being told on here, but I still dont know where in the ESA rules it makes the distinction- Im really not going to feel safe with my plan until I have that stuff at the ready.

Spoonie_Turtle

I don't have the brainpower to look through at the moment but I think the guidance for ESA is in the DMG - Decision Makers' Guide.  You'll probably want the chapter(s) on income, and maybe capital (in case it's not mentioned on the income chapters).

https://www.gov.uk/government/publications/decision-makers-guide-vols-8-and-9-employment-and-support-allowance-staff-guide

huckster

The information  is in the linked guidance that Spoonie poster above. Go to the self employed part and it says self employed earnings are those which are gainfully earned.  Gainful means organised developed business with aim of making profit.

Normally one property bought as a main home and subsequently let out is not considered a business. Any rent earned would increase capital savings and investments, which don't affect a contributory benefit. You have not bought the property with a view to let as an Airbnb.

I can see the CAB argument if this was an ESA Income based benefit, where the capital savings and investment would probably mean no entitlement to ESA income based.

If this was a B&B you were running supplying breakfast and other services then that would be self employment.

But don't rely on an online forum. If the guidance is not totally clear and is open to interpretation, then I think you need to ask ESA the question. If in the future I let my main home as an Airbnb supplying no services, purely short term let's, how would this affect my contributory based ESA claim?

Slonvinton

Thank you all,

I think I have found the relevant bit...I was starting to lose the will to live combing through this stuff and getting more and more confused about which benefits are being discussed when it says ESA.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/810648/admv5.pdf

 page 43

Slonvinton

huckster said:

But don't rely on an online forum. If the guidance is not totally clear and is open to interpretation, then I think you need to ask ESA the question. If in the future I let my main home as an Airbnb supplying no services, purely short term let's, how would this affect my contributory based ESA claim?

Yes I will do that, its better to be safe when Im thinking of putting so much money into getting the house into a fit state to rent. Its going to totally wipe out my savings and I would really rather not do that unless I can feel confident the ESA wont be affected. Its scary enough as it is...

Slonvinton

For completeness, for anyone else curious about this, here is the "gainful" bit in the gov docs. Ive added the link to the page as Im not allowed to post links yet.