During major sporting events such as The Open or Commonwealth Games, many people looked to boost their income by renting property to spectators and so on. So why might these people receive a letter from HMRC? Lauren Herbert advises.
A sporting event held over several days is a great opportunity to utilise spare rooms or empty properties to generate a bit of extra income. However, HMRC is keen to remind short-term landlords that rent from letting property is a taxable source of income and, depending on the circumstances, you may need to register for self-assessment and declare it to HMRC.
With relation to the recent Commonwealth Games, HMRC has obtained information from three online booking platforms to identify potential taxpayers and is writing to them to “make it as easy as possible to help them pay”. For those who receive a letter, this may appear quite worrying, but what they might not be aware of is that you are entitled to certain allowances that may mean you don’t need to report anything. If the property is not your main home, you can receive up to £1,000 each tax year before needing to consider registering (or reporting the income if you already submit tax returns). This is due to the property allowance.
If you are renting furnished accommodation in your main home, you might qualify for the rent-a-room scheme which is even better. Up to £7,500 (or £3,750 per joint owner if the property is in shared ownership) can be exempted.
So, before rushing off to register for self-assessment, check whether you genuinely need to do so.