The cost of living pinch in the UK is in full swing. There is no sign of inflation coming down and interest rates have hit a 15-year high. Data from the property portal Zoopla reveals that people are spending more of their wages on rent now than in the past ten years.
With this in mind, many are looking for new ways to make some extra cash. For those that live near a popular sporting venue, such as Wimbledon Tennis Club, bringing in this extra income could be easier than you think.
In fact, newly published data from AirBnB reveals that hosts in Wimbledon collectively earned £2.4 million during last year’s tennis tournament, with the average host earning almost £1,000.
Tim Walford-Fitzgerald, Private Client Partner at the accountancy firm HW Fisher explains “A person’s home is usually their most expensive asset but it is also one that often contributes the least back in financial terms, if anything at all. This doesn’t have to be the case. With international sporting events like Wimbledon, there are several ways that people can make some money from their home, and it’s important for people to be aware of the tax breaks that they are entitled to so that they can keep more of the new income they are bringing in.”
Two easy ways to start bringing in some tax-free income includes:
1. Got a spare single or double room? Put it up for let
Under HMRC’s rent-a-room scheme, an individual can receive up to £7,500 a year (£625 a month) from letting out a furnished room without any tax liability. This includes Capital Gains Tax, although if this exemption applies, the expenses for providing the accommodation cannot be deducted. Additional services provided such as cleaning and meals are acceptable within the exemption, however any receipts which exceed the threshold would be classed as trading income, and so National Insurance charges would apply.
Those feeling brave in SW19 might even let their entire property while they sun themselves elsewhere for the fortnight.
2. Turn your driveway into an advantage point
If you are thinking about renting out a spare parking space, the £7,500 tax-free threshold does not apply. Instead, an individual can receive up to £1,000 a year tax free under the property allowance. Staying below the £1,000 limit means a tax return does not even need to be filed.
Tim adds: “It’s fantastic to see apps like AirBnB and JustPark making it easier than ever for people to make some extra cash from their homes – but these apps can make it just as easy to forget about the tax an individual might owe to HMRC. Always make sure to file a tax return if you are earning rental income – typically by the following 31 January – to avoid any nasty surprises in the long run.”
To discuss specific circumstances, please get in touch with a member of the team.