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Renting out home via Airbnb

Tax treatment

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Hi everyone - I'm not sure if this has been asked before, but I can't seem to find anything on it.

I have clients (married couple) who went away on holiday for a month and rented out their home via Airbnb - as holiday accomodation.

This was the only period that the property has ever been made available for any sort of lett.

The total earnings for the period was circa £4k - my queries are:

1 - this is treated as FHL?

2 - can this be split between a husband and wife as is most tax efficient (according to the FHL rules)

TIA

 

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By Wanderer
17th Jan 2021 14:28

1. No.
2. No.

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By tom123
17th Jan 2021 15:16

Out of interest (as this is not my line of work) is there a reason why the default would not be 50/50 assuming both spouses are named on the deeds etc?

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By Paul Crowley
17th Jan 2021 15:25

This is just rental so would indeed be as per deeds
Op does not suggest 50/5o
Op is suggesting in any such proportion as suits the 'traders' Eg 1% and 99%

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By Wanderer
17th Jan 2021 18:29

https://www.legislation.gov.uk/ukpga/2007/3/section/836
Exception D
IF it was FHL income, which it isn't.

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By Hugo Fair
17th Jan 2021 15:29

If you want to know more about FHL then feel free to read the (unusually clear) guide to it published at https://www.gov.uk/government/publications/furnished-holiday-lettings-hs...

But as Wanderer says more succinctly than me ... what you've described doesn't pass even the most basic of the minimum criteria set out in this guidance!

By definition the earnings are income and so subject to tax. If what you're asking is how to minimise the resultant tax then you should approach a tax adviser, who will want to know a lot more about clients' financial affairs than the set of info that you've provided in isolation.

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JCACE
By jcace
17th Jan 2021 17:37

Have you considered Rent-a-room relief?

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By Hugo Fair
17th Jan 2021 21:56

Although this can be a way of treating income (received by an individual letting out their own home) more tax efficient, other factors should also be considered:

* If you opt to use this scheme for rental income then you can no longer deduct expenses (such as letting agents' fees) before working out how much tax to pay.

* If the property is subject to a mortgage, permission for the property to be let may need to be obtained from the lender. Alternatively, if the property is rented then permission to let any part will often need to be obtained from the landlord.

* The provider of contents insurance will also usually require to be notified if the property is let.

* There are also legal aspects when becoming a landlord (however temporarily) ... e.g. fire and gas safety regulations (risk assessments and safety measures), etc.

Airbnb has a lot to answer for! Just bear in mind that renting out your whole home was not the intention of the scheme (the clue is in the name) ... and the govt has previously threatened to prevent the scheme applying where an entire home is rented out (unless the owners are present for at least some of the guest’s stay)!

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By Moonbeam
18th Jan 2021 07:53

I would advise you subscribe to the Taxcafe books on property. Start with "how to save property tax" at a mere £19.95. These are well written books that even I can understand.

https://www.taxcafe.co.uk/

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