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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4797
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My wife and I own a caravan which we rent out than 105

Customer Question

My wife and I own a caravan which we rent out for more than 105 nights per year. In the 2015-16 tax year our income was £7500 and expenses £4700 (site rent, insurance, gas, electric, cleaning). We purchased the caravan on site in 2013 for £50,000.
Can I offset any of this plus other depreciation against income to minimise the tax burden?
Do you have accountants who would complete our tax return for this year (for a fee), after which we would hope to do it ourselves.
Tony
Submitted: 6 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your question.

You say you rent out your caravan for more than 105 nights a year say around one third of the year.

Caravans provided mainly for holiday lettings qualify for capital allowances as plant and machinery. More information on this can be found here (Sec 23 List C)

http://www.rossmartin.co.uk/capital-allowances-75082/293-what-qualifies-as-plant-a-machinery

and here

http://www.bha.org.uk/bha_blog/tax-relief-for-caravanlodge-home-owners/

This site does not recommend accountants or other advisors. If you are stuck in completing your tax return, I will be happy to help you here.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Please only rate my answer if it is acceptable to you.

Customer: replied 6 months ago.
I sent a further question for clarification last night. Did you receive it, please, or should I send it again?
Tony
Expert:  taxadvisor.uk replied 6 months ago.

Hi Tony, thanks for your reply..

I did not receive any further question from you..please resend it.

Many thanks

Customer: replied 6 months ago.
I apologise that these additional queries/points did not get through to you last night :(i) I understand that from 2012 a Caravan can be classed as a Furnished Holiday Letting if it is let at least 105 nights per year(ii) We purchased the caravan in 2003 for a total (including set-up on site) of £50,000. Can we set 10% of this against taxation each year? If we do, does this affect 'Wear and Tear Allowance'?(iii) Will the Tax people accept our payments for Gas, Electricity, Cleaning etc without receipts?(iv) I have been told that we can reasonably claim travel to and from the caravan (800 miles round trip) 3 or 4 times per year to check its condition etc. Is this so? Would we need car fuel receipts for this?(v) I would appreciate help for this first Taxation return - have you any suggestions, please? Until we started letting this caravan we did not have to complete a return each year as our Pensions were the only income.Tony
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your reply..

You are correct in your understanding about the caravan being classed as a furnished holiday letting business.

Wear and tear allowance was available against rental income arising from furnished letting. This has stopped from 6 Apr 2016 and now you claim actual cost of replacement of items.

More information on this can be found here

http://www.ukbudget.com/2015-summer-budget-measures/rental-property-allowable-expenses.aspx

It would be helpful to have receipts for expenses you claim against the letting income. Gas and electricity are normally paid for by DD's and your bank statement showing direct debit payments should suffice. For cleaning, you may have to write a receipt to support payment.

Your travel trips to the caravan site would be allowable expense.. I suggest you claim mileage allowance of 45p a mile for miles you travel for site inspection etc.

I will be happy to help you with your tax return as a premium service here.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 6 months ago.
Thank you for your answers.
I am still unsure about the new system replacing the Wear & Tear allowance. It begins from April 2016 - so is my Tax Return for April 2015-2016 under the old system?
This still leaves the question of claiming 10% of the Capital Cost of the Caravan (£50,000) each year as depreciation - unclear from the various papers.....
The difference between our 2015-6 Caravan Income and expenditure at present is about £3000. Tax on this @ 20% is £600! So obviously as a pensioner I am keen to reduce this to a minimum. I am very happy to pay your Premium charge for you to help complete my return if you think you might find additional claimable expenses. But if you think, following our correpondence to date, you think I have all the information I need, then I may as well do it myself!. Hope its not too embarassing to ask which you think is more worthwhile for me!Tony
Expert:  taxadvisor.uk replied 6 months ago.

Thank you for your reply.

Your tax return 2016 is under the old system as the new system is effective from 6 Apr 2016.

You would claim writing down allowance (capital allowance) against capital spend on a caravan. You bought a caravan in 2013 and the WDA is on reducing balance and not straight line..

I will be happy to review your accounts pertaining to letting income and your tax return and hopefully add value for the additional service. You have to decide if you think it is worth it. My fee in this case would be an allowable expense against rental income.

Does you income from all sources cover all your personal allowances?

I am sending you an offer in case you wish to take it.

I hope this is helpful.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it by Just Answer.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4797
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 6 months ago.

I thank you for accepting my answer and offer for premium service.

Many thanks

Customer: replied 6 months ago.
I am happy to accept your offer of more time and help with this tax return. What do I need to send you? Income from bookings? Fees of hiring agents? Gas and Electricity and cleaning charges? Mileage at 802mls each for 2 (3? 4?) visits for inspection?Perhaps a phone conversation will.,be best. I am not around from 9.00am to 12.00noon on Sunday 26th, or after 9.30am on Monday 27th. I should be around most of Tuesday. 01691 778599ThanksTony
Expert:  taxadvisor.uk replied 6 months ago.

Thanks Tony.

I will contact you tomorrow afternoon/early evening.

Enjoy your weekend.

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