I have two furnished holiday lets and need Tax/Business advice on how I set it up..

[Dubya]

apologies if this has been asked. I need someone to advise me on the following:

I have a very busy holiday let that is well established and produces circa £25k per annum gross
I have just listed one more holiday let but it is actually at my mothers, on her property. I have financed it and mum plans to pay me back by getting equity release on her property.
I have no idea how best to run this business in the most sensible manner. E.g bearing in mind capital gains, inheritance, income taxes. I need someone to tell me how best to set up. Either a very savvy accountant in this field or a tax advisor? I don't even know which. I just need a good chat to understand all the options and implications.
Please let me know if you are the person that can help or point me in the right direction.
Many thanks

 

[Gyumri]

However it is set up I assume you will be trading as a limited company and not in your own name as that would expose you to being personally sued if a renter trips over the carpet.

 

[WaveJumper]

You need to speak to a tax advisor / accountant asap in fact you probably should have spoken to one before you spent any money in the first place.

Interesting read here;

Which is a Better Investment: Holiday Let or Buy to Let?

Should you buy a holiday home that you can let out short term during the weeks or months you’re not enjoying it yourself – or a buy-to-let property that you can rent out on a long-term basis?

www.schofields.ltd.uk

 

[Fagin2021]

However it is set up I assume you will be trading as a limited company and not in your own name as that would expose you to being personally sued if a renter trips over the carpet.

Not at all - any holiday let will need public liability insurance to cover accidents.

 

[Fagin2021]

apologies if this has been asked. I need someone to advise me on the following:

I have a very busy holiday let that is well established and produces circa £25k per annum gross
I have just listed one more holiday let but it is actually at my mothers, on her property. I have financed it and mum plans to pay me back by getting equity release on her property.
I have no idea how best to run this business in the most sensible manner. E.g bearing in mind capital gains, inheritance, income taxes. I need someone to tell me how best to set up. Either a very savvy accountant in this field or a tax advisor? I don't even know which. I just need a good chat to understand all the options and implications.
Please let me know if you are the person that can help or point me in the right direction.
Many thanks

It's fairly straightforward to run your established holiday let as a business. Any accountant with experience in this area will - and presumably has - advise you about HMRC requirements for running it as a business (eg days available to let and actual days let), and business rates and rebates.

A bit more tricky is a holiday let on your mum's property. I know this because I have a let on my own property. As well as the other taxes you mention (like capital gains) you have to consider council tax and (in some parts of the country) council tax premiums. Is it a holiday let or an annex or a second home ? The legislation isn't always clear about these definitions and their effect.

Again, an accountant with holiday let experience shouldn't have much difficulty sorting you out. One of the key questions is how much and what costs you can set off against letting income before you risk becoming liable for CTG on the sale of the whole property (including your mum's home).

 

[Gyumri]

Not at all - any holiday let will need public liability insurance to cover accidents.

I wouldn't rely totally on an insurance policy. Accidents and negligence in securing a carpet might be looked at differently!

 

[Gyumri]

The risk in being sued personally is just too big a risk to take and there is no reason to do so.

 

[Dubya]

It's fairly straightforward to run your established holiday let as a business. Any accountant with experience in this area will - and presumably has - advise you about HMRC requirements for running it as a business (eg days available to let and actual days let), and business rates and rebates.

A bit more tricky is a holiday let on your mum's property. I know this because I have a let on my own property. As well as the other taxes you mention (like capital gains) you have to consider council tax and (in some parts of the country) council tax premiums. Is it a holiday let or an annex or a second home ? The legislation isn't always clear about these definitions and their effect.

Again, an accountant with holiday let experience shouldn't have much difficulty sorting you out. One of the key questions is how much and what costs you can set off against letting income before you risk becoming liable for CTG on the sale of the whole property (including your mum's home).

Thanks Fagin. My current furnished holiday let (FHL) ticks all the boxes in terms of days let etc. It is also registered for business rates instead of council tax. It is let via airbnb so is fully insured without me being a Ltd Company. The new FHL at mums is also via Airbnb so the same applies for insurance. We have also taken out Personal Liability as part of mums buildings insurance with a provider that knows we are letting via airbnb. They are specialists in this market so I am happy that we are well covered for insurance. I think what I need help with is thinking strategically e.g. should I have both FHL's income in my name or one in mine and one in mums? The advantage to me personally of having two is applying for funding down the track and showing all the income. Splitting it between me and mum would allow her personal allowance to be used to reduce the tax burden. What if I set up a Ltd Company to take both FHL income and have mum as a director paid in divs etc. If nature takes its course and Mum meets her maker before me what are the complications in probate? How best to arrange her will (I have 3 siblings) etc etc. I need someone to help us think about the whole thing. I know a little but I have made enough mistakes in my life to worry that I am about to make another. I'm probably overthinking it but once bitten etc..

 

[Dubya]

I wouldn't rely totally on an insurance policy. Accidents and negligence in securing a carpet might be looked at differently!

we don't have carpets. Seriously though, both FHL's are with airbnb and they insure me against personal accidents. Negligence would always be hard to fight but it would have to be easy to prove and we have two high quality, well maintained FHL's. I have had over 350 guests and have rave reviews. I'm confident.

 

[Dubya]

You need to speak to a tax advisor / accountant asap in fact you probably should have spoken to one before you spent any money in the first place.

Interesting read here;

Which is a Better Investment: Holiday Let or Buy to Let?

Should you buy a holiday home that you can let out short term during the weeks or months you’re not enjoying it yourself – or a buy-to-let property that you can rent out on a long-term basis?

www.schofields.ltd.uk

My holiday let makes substantially more income than letting it to a tenant. It also gives me the opportunity to maintain the property and visit it now and then as well as use it store my furniture in the garden sheds. Far too many pluses when weighed against a regular tenant who might not pay, take months to evict etc.

 

[Fagin2021]

Thanks Fagin. My current furnished holiday let (FHL) ticks all the boxes in terms of days let etc. It is also registered for business rates instead of council tax. It is let via airbnb so is fully insured without me being a Ltd Company. The new FHL at mums is also via Airbnb so the same applies for insurance. We have also taken out Personal Liability as part of mums buildings insurance with a provider that knows we are letting via airbnb. They are specialists in this market so I am happy that we are well covered for insurance. I think what I need help with is thinking strategically e.g. should I have both FHL's income in my name or one in mine and one in mums? The advantage to me personally of having two is applying for funding down the track and showing all the income. Splitting it between me and mum would allow her personal allowance to be used to reduce the tax burden. What if I set up a Ltd Company to take both FHL income and have mum as a director paid in divs etc. If nature takes its course and Mum meets her maker before me what are the complications in probate? How best to arrange her will (I have 3 siblings) etc etc. I need someone to help us think about the whole thing. I know a little but I have made enough mistakes in my life to worry that I am about to make another. I'm probably overthinking it but once bitten etc..

I don't believe you're 'over-thinking' at all ! It's only wise to get things set up correctly before they become an issue. There's plenty of people who thought they knew the law - about property ownership, tax, divorce, inheritance etc etc - only to find that it's bitten them on the bum when a bit of money spent on a professional could've saved them a lot of grief.

Having said that, I take a fairly dim view of many 'professionals' and always ensure they have indemnity insurance so I can sue their a**e off if need be.

I don't think your situation is that complicated but a decent accountant should be able to sort you out - for example, should you 'employ' your mum as a director or a cleaner or at all ? I'm not a pro' so I can't tell you. In my case I rely on a pro' who is also my wife. I don't like to think what would happen if I tried to sue her.

I too have a listing on Airbnb though that's not where most of my lets come from. Airbnb are pretty good though I don't like their terms of business with regards to payments and cancellations.

 

[Frank Wessely]

apologies if this has been asked. I need someone to advise me on the following:

I have a very busy holiday let that is well established and produces circa £25k per annum gross
I have just listed one more holiday let but it is actually at my mothers, on her property. I have financed it and mum plans to pay me back by getting equity release on her property.
I have no idea how best to run this business in the most sensible manner. E.g bearing in mind capital gains, inheritance, income taxes. I need someone to tell me how best to set up. Either a very savvy accountant in this field or a tax advisor? I don't even know which. I just need a good chat to understand all the options and implications.
Please let me know if you are the person that can help or point me in the right direction.
Many thanks

Hi Dubya, apologies for coming late onto this thread. Have you found a “savvy accountant” or are you still looking? Thanks.