Leading accounting, tax and advisory practice Blick Rothenberg and pre-eminent law firm Healys are warning those seeking to supplement their income from sporting events in their locality to be aware of the potential tax and legal implications of “letting” their property.
With the rise in costs of attending and parking at sporting events, an increasing number of enterprising individuals are seeking to “earn a little extra” by offering their driveways for rent on match days. Indeed, as the new Premiership rugby season approaches, various websites akin to Airbnb are encouraging those who live near rugby grounds to adopt this practice.
Depending on the location, charges could be as high as £16 per space per match day with the spaces being made available for a four-hour period. For major events such as the Autumn internationals, budding entrepreneurs may seek to let their entire property, not just the parking spaces.
Fiona Fernie, partner at Blick Rothenberg said: “Although it may produce some welcome additional income, this practice potentially also gives rise to tax issues. Unless this is your only income and you are therefore earning less than the annual personal allowance, income tax may be payable on the amounts received; although a new annual allowance introduced from 6 April 2017 will exempt the first £1,000 of rental income in these situations.”
She added: “Furthermore for those whose only other income is paid under PAYE and whose income exceeds the personal allowance, this introduces the need to submit a self-assessment tax return, disclosing the receipt of the rental income. The deadline to register for self-assessment is 6 months after the end of the relevant tax year (by 5 October 2019 for income earned in the 2018/19 tax year). The penalties for submitting a late tax return start at £100, rising to £1,000 plus 5% of any tax due depending on the date of submission. Failure to disclose such income may also result in significant penalties.”
And the repercussions do not stop there. As well as the potential tax implications there may be significant legal implications.
Clive Robertson, a Consultant at Healys said: “The terms of such a letting need to be clear. If an owner uses an agency then the terms will usually be contained in a standard form document to be signed by the parties. If the owner contracts directly with the intended tenant, then legal advice should be obtained with regard to what safeguards can be put in place to protect the Occupier. In considering the terms, Occupiers should also give thought to what other permissions and consents might be needed before the letting can proceed.”
Clive added: “If the property is freehold the Occupier can call the shots but if leasehold, then the consent of the landlord will almost certainly be needed. In addition, the company insuring the land in question will need to be consulted. The insurer will wish to quantify risk, so as to determine what terms may be available and at what cost.”
The legal ramifications may extend even further: if the property is used to secure lending then the lender will need to give consent to the arrangement. So the bank or building society should be asked for permission.
Planning requirements should also be given consideration. If the proposed letting might constitute a change of use, consult the local authority planning department. A charge of £385 can be made by local authorities for this service.
The extent of the agreement and enquiries to be made will be dictated by the nature of the letting; a house for the duration of an event lasting two weeks (such as Wimbledon) or a month (such as the Autumn Internationals) will require a different approach from the letting of a single parking space for a day at Twickenham. The former will demand a legally watertight agreement, whilst the latter might merely have the basics set out on a single page.