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Letting a room through Airbnb? HMRC tracks your income & data!

Letting a Room through Airbnb? HMRC Tracks your Income!

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Letting a room through Airbnb? HMRC tracks your income & data!

Back in late 2015, we forewarned that HMRC was planning to force on-line companies like Airbnb to share customer income data with them. That plan has come to fruition and HMRC is now receiving detailed information from Airbnb and other online providers. The data will tell HMRC about lettings income that may have been previously falling under their radar.

Airbnb is an on-line marketplace where people can rent out rooms, cottages, apartments and suchlike to those looking for short-term accommodation, city breaks, holidays or lower cost alternatives to hotels and overnight business stays.

We understand that various on-line providers, including Airbnb, are now exchanging information with HMRC. HMRC then uses their analytical tool “Connect” to track and monitor income from such sources. This powerful application was developed by BAE Systems and is the most advanced data gathering tool HMRC has at its disposal.

So, if you let property or a room on Airbnb, you can expect detailed information to be passed to the Revenue about your letting activities and the income it generates. While you may currently be able to earn up to £7,500* per year tax-free for furnished accommodation under the Government’s ‘Rent a Room Scheme‘, care needs to be taken to submit a tax return and pay tax on any income received once you have gone over that limit. Higher rate taxpayers also need to take care if their rental income pushes them into a higher tax bracket.

In order to qualify under the Rent a Room Scheme:

  • The room must be furnished;
  • The relief cannot be used if you let your home whilst living abroad;
  • The accommodation provided cannot be office space or business space.

Changes arriving in 2019:

HMRC recently held a consultation with relevant professionals and the public about whether the scheme should continue in its present form. Following this, they have announced that the scheme will be more restricted; landlords who do not live in their “main residence” at the same time as their tenants will probably no longer be able to claim “rent a room relief” from 6 April 2019.

Tax Help & Advice for Lettings Income

If you need our help handling your lettings tax needs, Taxfile is here to assist you. We’re tax experts and can guide you through the maze of rules and regulations concerning lettings, renting out accommodation, tax thresholds, knowing when it’s appropriate to work under the Rent a Room Scheme, whether you can claim expenses and so on. Book an appointment at your nearest Taxfile office: for Tulse Hill in London SE21 book an appointment on-line here; book here for Dulwich in SE21; for Battersea in SW8 book your appointment here or for Exeter and the South West, book your appointment here. We also have tax advisers who are available in other UK locations including Poole in Dorset, Carlisle, Yorkshire and Plymouth. Alternatively, simply call 0208 761 8000 or send us an email here and we’ll be happy to help to get you on the right track.

Learn more about our services to landlords and those earning an income from property lettings here.

* Correct for tax years 2016-17 and 2017-18. For tax year 2015-16 the threshold was only £4,250. Also note that the current year’s threshold reduces to £3,750 if someone else, for example a joint owner, receives lettings income in the same property.

Tax credits renewal deadline is just days away!

Tax Credits Renewal Deadline Just Days Away – Don’t Miss Out!

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Tax credits renewal deadline is just days away!

If you’re claiming tax credits and haven’t yet renewed, then you’d be wise to pay very close attention to the following …

Don’t Miss Out

Tax Credits are payments made to eligible people with children and/or very low incomes. Examples include Tax Credits and Child Tax Credits and the payments are made by the UK Government. However, the scheme rules are complex and part of that includes a strict renewal process, with a built-in deadline.

Renewal Deadline

Alarmingly, even if you are already claiming tax credits, there’s a high likelihood that your payments will cease completely unless you take proactive steps to renew your claim to them by 31st July* 2018 — that’s just a few days away at time of writing, so there is no time to lose.

* If your renewal pack states a different deadline, then that applies instead of 31st July in your case.

How to Renew Tax Credits

If you are claiming tax credits, you will be sent a renewal pack.

If your renewal pack has a red line across the first page, then you will need to send a reply.

Note that you can only renew your claim once you have received your renewal pack. Having received the pack, you should then ideally renew your tax credits online although see below for other options.

Automatic Renewal

If your form shows the code ‘TC 603 R’, you do not need to send a reply and your tax credits will be renewed automatically. However, you must make sure that you check the form carefully in case any of your details are incorrect. Should you fail to report any errors or to confirm any changes in your circumstances, your tax credits could stop or you could receive a fine. You can report errors and changes in circumstances using the Tax Credits Online Service.

Online Renewals

Renewing online is HMRC’s preferred method of renewal, via the Gov.UK website.

Telephone Renewals

To renew your claim to tax credits via telephone, simply contact the Tax Credit Helpline on 0345 300 3900 or textphone: 0345 300 3909.

Postal Renewals

You can also renew your tax credits claim by post. Send your claim to: Comben House, Farriers Way, Netherton L75 1AX. Make sure that your renewal claim arrives by 31 July and we also recommend sending by recorded delivery so you have some proof of the arrival date.

What Next?

You should hear back from HMRC within Read more

Capital Gains Tax Rule Changes for 2nd properties and property rentals

Second Property & Rented Property ‘Tax Trap’ for the Unwary

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New Capital Gains Tax rules for 2nd properties and property rentals

Owners of second properties and let properties need to be aware that HMRC is planning to introduce new rules from 6 April 2020 to require payment of Capital Gains Tax much, much earlier! The window of payment will be reduced from 31 January following the year of the gain to a mere 30 days from the date of the sale.

Effectively, ‘in year’ reporting of the estimated gains – and payment of the tax – is mandatory under the new rules. Failure to report the gains and pay the tax will lead to penalties for landlords and second home owners.

You will only be able to offset losses accrued at the time of the disposal, so losses later in the year will not be available against the payment on account.

Summing Up:

  • If you make a capital gain in 2018/19 (before the new rules kick in) you will pay the capital gains tax on or by 31 January 2020.
  • For the sale of a house that is let, or a second property, with exchange of contracts occurring on, say, 15 April 2020 with completion happening on 15 May 2020, the Capital Gains Tax (CGT) has to be paid by 14 June 2020. This accelerates the payment of the tax to the Exchequer by 7 months.
  • So, perversely, the later year requires the Capital Gains Tax payment before the earlier year, as you can see above!

The other difficulty is knowing what rate to apply because a higher rate taxpayer has to pay 28% on a gain but a basic rate taxpayer has to pay tax at 18% up to the limit of the basic rate band that is unused. This is, of course, one situation where Taxfile can help to work out the tax implications for its customers. Tax calculations are what we do best and we’re here to help you!

Note that Scottish tax rates may vary.

HMRC is currently assessing feedback on their consultation, which closed on 6 June 2018.

If you believe this change of rules is wrong, one option is to write to your MP to complain.

Professional Help with Tax & Accountancy – for Landlords & More

For help with accountancy and tax for any property, lettings or any capital gains situation you may find yourself in, contact your nearest branch of Taxfile. We have London offices in Tulse Hill (SE21), Dulwich, Battersea (SW8) and another in the Exeter in the South West along with additional tax consultants in Carlisle in the North of England, Yorkshire in the North East, Poole/Dorset and Plymouth in the West Country. Call 0208 761 8000 for an introductory chat or appointment, contact us here or click the bold links for more information. We’ll be happy to help and to get your tax affairs in order.

Using 'Trading Income Allowance' to save tax

Making the Most of your Tax Allowances for Small Trading?

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Using 'Trading Income Allowance' to save tax

Are you making the most of your tax allowances for small trading? If you have small earnings from self employment, then it may be advantageous to make a claim for Trading Income Allowance i.e. to claim a flat rate deduction of £1,000 for expenses instead of claiming the actual expenses incurred.

Example:

Christina has income of £2,360 and expenses for web hosting of £204, software of £103 and publishing costs of £430
(total expenses £737).

As her expenses are less than £1,000 she can claim £1,000 Trading Income Allowance in preference to claiming the actual expenses.

Her taxable profit therefore becomes £1,360 instead of £1,623. So, she pays less tax!

This is just one simple way in which Taxfile’s knowledge of the tax system can help its customers pay less tax in a totally acceptable way from HMRC’s perspective.

Contact your nearest Taxfile branch

Please do contact us for any accountancy work that you or your business(es) require. We’re tax experts and are also very well trusted by HMRC because we deal with them on a daily basis on behalf hundreds of clients. We have several UK branches including in Tulse Hill, Dulwich and Battersea in London, Exeter and Plymouth in the South West along with our tax specialists in Poole (Dorset), Carlisle in the North of England and Yorkshire in the North East. Call 0208 761 8000 or contact us here for more information — we’ll be happy to help you to get your tax affairs in order in the most tax-efficient way.

CIS tax refunds and returns - help now available across the UK

Help with CIS Tax Returns & Refunds Across the UK

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CIS tax refunds and returns - help now available across the UK

As well as having 2 London based teams dealing with CIS returns and refunds, we’ve now introduced the same service for clients who are further afield in the UK. If you are a CIS contractor or sub-contractor we now have tax help available in the South West, the North East, the North West and, of course, our existing services in London and the South East of England.

More specifically, we can help you if you are:

  • in Cornwall/Devon (within a 30 mile radius of the Plymouth PL12 post code),
  • in Yorkshire in the North East (within a 50 mile radius of S72 post code area),
  • in the Carlisle region in the North of England,
  • in or around Exeter, Topsham, & Plymouth in Devon,
  • Of course, that’s on top of the existing bases in Tulse Hill and Dulwich in South London,

So if you’re near any of these areas and need professional help with any aspect of accounting and tax, particularly for construction industry CIS tax returns and refunds, do get in touch.

In the first instance, call us on 0208 761 8000 to arrange an appointment with your nearest Taxfile representative, book an appointment online or use the contact form below to send us a message about your particular tax situation or accountancy needs. We’ll make paperwork and claiming any tax refund easy! Read more

TAX HELP! Your 1-stop tax shop

Taxfile: Your One-Stop Tax & Accountancy Shop

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TAX HELP! Your 1-stop tax shop

Taxfile has over 100 years of combined tax and accounting experience. It’s incredible to think that the key personnel have administered over 30,000 tax submissions in the past 20 years! Beginning way back in 1994 (and continuing as Guy Bridger Limited from 1997), we originally started business offering only CIS sub-contractor returns but quickly developed the service to help the self-employed, local businesses and higher rate taxpayers with their tax computations. Along the way we added tax and accounting services for taxi drivers, cab drivers, landlords and more. We also offer Capital Gains tax expertise and tax investigation help and, more recently, professional help with disclosures, written tax advice and tax planning for things like inheritance.

We have exceptional accounting experience in all key tax and accounting areas including:

Taxfile helps individuals as well as businesses. Our customers are very varied, turning over anything from £10,000 to over £1 million a year. A few are high wealth individuals who no longer need to work but still need to account for their taxes etc. Some customers have retired, others operate small businesses and some don’t even live in the UK but may have assets here. So, whatever your income, assets or situation, the message is that if you need ANY tax-related help, you’ve found the right place in Taxfile.

Taxfile also has the back-up and expertise of professional bodies on tap (so nothing is too complicated for us) and also has excellent relations with the tax authorities — we’re very well trusted by HMRC. Guy even helps in the local employment zone, which aims to improve business in the Tulse Hill and West Norwood area. So, Taxfile is very much part of the local community, particularly in South London (but expanding to other areas too — keep an eye on this blog for forthcoming information about that in the very near future).

Whatever help you need with tax and accountancy-related matters, call Taxfile on 0208 761 8000 and we’ll be delighted to help you. Alternatively, Read more