As Wimbledon commences, and with other summer sporting events such as cricket tests at Lord’s on the horizon, HMRC is looking to clamp down on undeclared income
The rise of websites such as Airbnb has seen a huge increase in opportunities for residents living nearby major sporting venues offering short-term lettings as they seek to capitalise. HMRC is keen to ensure income from such lettings do not go undeclared, London-based firm Blick Rothenberg is warning.
Blick Rothenberg personal tax manager Stefanie Stapleton adds that HMRC will be monitoring activities such as selling strawberries and cream, renting out a parking space or allowing souvenir sellers a pitch in the front garden, alongside renting out property.
However from 6 April 2017, two new annual allowances are due to be introduced and should be available to taxpayers in these situations.
Stapleton said: ‘A new trading allowance exempts the first £1,000 of trading income per annum and would cover, for example, selling strawberries or bottled water from outside your home. The second allowance covers the first £1,000 of rental income, which would include income from letting out parking spaces or driveways as pitches for traders.
‘However, the two allowances were scrapped at the last minute, along with other measures, from the revised Finance Bill, but the postponed clauses are expected to be introduced in a second Bill, with effect from 6 April 2017. If your income exceeds these allowances, you may need to register for self assessment.’
Despite those warnings, there is the option to the government’s Rent a Room scheme, which offers £7,500 per year tax free.
Anita Monteith, ICAEW tax faculty technical manager, explains: ‘The Rent a Room scheme provides a welcome tax break to help you maximise your income without incurring tax. Major sporting events such as Wimbledon and the Henley Regatta are perfect opportunities to participate in the scheme and you can save even more if you are diligent with keeping detailed records of income and outgoings.
‘If you take in a lodger, you must tell your mortgage lender or landlord and your buildings and contents insurer to make sure you aren’t breaching the terms of your mortgage, lease or insurance. Your insurance company may need to arrange extra cover.’
HMRC, however, is reviewing Rent a Room to ensure it is more aligned with long term letting arrangements.
Details of the Rent a Room scheme are available here.
