Thinking of Letting a Room or Property to Holiday Makers?

Date: 22/06/18

Thinking of Letting a Room or Property to Holiday Makers?

Living in such a beautiful part of the world whilst being bombarded with tempting messages from short-term property letting sites such as AirBnB, means many of us have considered the potential of topping up our income by letting out a room, or even an entire property, to tourists and holiday makers. The development of easy to use apps on smart phones allows homeowners to run these micro businesses remotely. Bookings and emails can be handled during lunch breaks, when watching TV or while enjoying a drink with friends.

 For homeowners letting rooms on an occasional basis, VAT is quite probably not something to worry about, but once the business starts to evolve or when a holiday cottage is involved, it is important to consider how VAT should be handled. In normal circumstances the letting of residential accommodation is exempt. However, once the nature of the letting falls into the category of “hotel and similar accommodation” standard rating applies.

 If letting your property through a platform like AirBnB, be sure to keep an eye on the turnover for the previous 12-month period. As soon as this reaches £85,000 you MUST register for and start charging VAT.  And remember, VAT must be calculated on the full rental price REGARDLESS of how much commission the site or platform takes from that price.  For example, if the rental price is £500, VAT must be calculated on the full amount even though the site may take £100 in commission and the property owner receive just £400.

 For help with VAT relating to this or any other activity, don’t hesitate to contact us on 01524 67111. We will be delighted to meet up and discuss how we can support your business.



Sam McMorland FCCA

Author: Sam McMorland FCCA

Sam joined Scott & Wilkinson in 2002, qualifying as an Accountant in 2007.  Sam was a pupil at Giggleswick School and moved to the Lancaster area in 1999 in order to attend Lancaster University, where she obtained a degree in Mathematics...

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