1 Mins
The Open golf in St Andrew’s this year and the return of the Edinburgh festivals have brought a large number of tourists back to Scotland and with them an excellent opportunity to bring in some extra income for those renting out property during these events.
This however has some tax implications that you may or may not be aware of; the first important point to consider is whether the rental will qualify for the rent-a-room scheme, HMRCs guidance on this is that the property will have needed to be your residence for some or all the tax year to qualify. You do not need to have owned the property yourself, a property you rent still qualifies.
If the property falls within the rent-a-room scheme you can deduct relief of up to £7,500 against the rental income. It is £7,500 per individual but this is split if two individuals rent a joint property so up to £3,750 each.
If the income you receive is equal to or below the maximum relief the income you receive is treated as exempt income and nothing needs to be reported to HMRC.
If the income you receive is above the rent a room allowance, you will need to report the income to HMRC through the self-assessment system and pay tax at the relevant rates.
If you have not occupied the home within the year, your income will fall into either the typical rental rules or furnished holiday let rules.
Rental income from this summers 2022 events will be taxable in the year to 5 April 2023 for which the due date for the tax return and tax will be 31 January 2024.
If you are unsure if you qualify for rent a room, furnished holiday let or residential rental, it is important to take advice as the tax rules for each differ significantly and it is important to maximise the reliefs available to you.
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