Tenants offering letting rooms will have to be aware of new guidance regarding VAT implications issued by HMRC. The guidance, issued in a revised notice from the Revenue and Customs’ office explains that income from staff members for rooms, food or drink will now be treated as including VAT and must be included on VAT returns in future.
For example, if a member of staff pays £100 per week for accommodation to the tenant then this will now be assumed to be £83.33 plus £17.77 VAT. Alternatively, the cost would have to be increased to £120 to maintain the same £100 income.
For further guidance tenants are advised to contact their accountant to ensure their tax returns remain in order.