As Wimbledon commences alongside with other summer sporting events, HMRC is looking to scrutinise those who has undeclared income from websites such as Airbnb.
The rise of the website Airbnb has provoked opportunities for residents living nearby major sporting events to offer short-term lettings as they seek to capitalise. As a result, HMRC is keen to ensure that the income from these lettings don’t go undeclared.
In addition to this, HMRC will also monitor activities such as selling strawberries and cream, renting out a parking space or allowing souvenir sellers pitch in the front garden.
To tackle this issue, two new allowances were supposed to be introduced and should be available to taxpayers who are in these situations.
The new trading allowance exempts the first £1,000 of trading income per annum and would cover trading such as selling strawberries or bottled water from outside your home. The second allowance covers the first £1,000 of rental income which includes income from letting out parking spaces or driveways as pitches for traders.
However, they were invalidated last minute along with other measures from the revised Finance Bill. These 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 this, there is another option to save tax which is the government’s Rent a Room scheme. Rent a Room scheme offers £7,500 per year tax free. It provides a welcome tax break to help maximise income without incurring tax. HMRC is also reviewing this scheme to ensure that it is more aligned with long-term arrangements.
The major sporting events such as Wimbledon and the Henley Regatta are perfect opportunities to participate in this scheme. You can save even more if you are in keeping with your detailed records of income and outgoings.
It’s also important to remember that 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 as your insurance company may need to arrange extra cover.