Hiring out a motor home - business or not?

[maidofkent]

My sister-in-law has asked for advice and the more I think about it, the more complicated it could be. I'm sure someone will be able to clarify for me...

She has had a Motor Home for the last 2 years, which she bought on Hire Purchase. The HP agreement was for 5 years, so another 3 to run.

Because money's tight, she's decided to rent the Motor Home out, the other option would have been to sell it. When the HP is finished in 2012, she will no longer rent it.

She has customers - employees of the company my brother works for - who regularly travel to an office in London, and who are paid subsistence and overnight allowance. Instead of them staying in hotels or b&b's, she will rent the Motor Home, and provide a microwaveable meal, in return for something equivalent to their subsistence allowance. Currently she has bookings for 3 nights a week, until February 2010.

The Motor Home is her own private property, and she uses it herself almost every weekend.

Question is: does she need to go self-employed for this? Or can she declare the income and claim expenses on her usual tax return? I'm guessing the fact she's going to provide food will have a bearing on this?

It isn't a business venture - she simply wants to cover the HP payments. When the Home is paid for (2012) she will end the arrangement.

Advice and guidance appreciated.

MoK

[Blackberry]

Seems like a raw deal for the employees!

Who'd want to give up a cushy hotel and pub dinner for a spot of camping and a pot noodle :|

[maidofkent]

Well, it can't be that bad, can it? She's got bookings until February 3 nights a week.

MoK

[KidsBeeHappy]

Seems like a raw deal for the employees!

Who'd want to give up a cushy hotel and pub dinner for a spot of camping and a pot noodle :|


A lot of the BBC crew for the British Golf Open were put up in Caravans this year.

[KidsBeeHappy]

This is a business, because she is doing it for income. But it shouldn't all be bad because she should be able to claim some of the HP interest (not payments, interest).

Is she already self employed -you said she already sends a tax return in, so presumabley she has more than just employed income?

Yep, draw up some accounts at the end of the year, bring in the motorhome as an asset, claim some capital allowances on it, but pro-rata it so that 4/7 private, 3/7 claim as business for example. Claim the same proportion of HP interest (not payments). And a proportion of any other incidental expenses eg electricity, insurance, gas, etc.

And after all of that there may be a bit of a profit which will be taxable, but it won't be nearly as bad as she's probably worrying about.

[MarkN]

I was chatting about this the other day down the pub.

When I've looked into it for a week it was very expensive to hire a motorhome.

From a lenders point, I'd imagine the insurance would be very expensive.

[maidofkent]

Thank you Boxby.

She used to be self-employed (a locum pharmacist), but is now employed in a hospital pharmacy.

I just wasn't sure whether she should register self-employed again for this. But it makes sense.

MarkN, yes, the insurance is more, but she isn't in it to make money. She had the home anyway, and the other option was to sell it, which she didn't want to do. It doesn't really matter how much profit she makes, or if it only just breaks even.

MoK

[elainec100@cheapaccounting]

She will have to apportion the costs business v private usage etc.

But this is a business IMO.

[davidshaw89]

Does the hire purchase agreement allow for the renting of the motorhome?

I know that mortgages generally don't allow for letting of a property, some car hire purchase agreements prohibit the use of the vehicle as a taxi etc, so it may be worth your while to check this out to cover your back in the long term.

[fathippy]

what is the "threshold" used for whether something can be put in the property section of a self assesment return. If this was a holiday home, you would not need to register as a business, but merely fill in the property part of the self assesment, likewise if you rented out a business premises, or even a billboard poster (i believe).

Therefore, since people are paying to live in it, the suggestion is surely that because it has wheels it becomes a business - which seems odd.

I agree that providing meals clouds it slightly, but I wouldnt find it outrageous if someone said to me that the basic premise was renting out a premises (albeit for short lets).

Any thoughts?