From celebrity visits to Cheltenham Festival: The new tax rules landlords can’t ignore

Written by Nick Latimer, tax partner in the Cheltenham office of national audit, tax, advisory and risk firm Crowe

The visit of US Vice President JD Vance to The Cotswolds for his summer vacation should act as a timely reminder to Gloucestershire homeowners to prepare for a new tax regime which could catch out the unwary in 2026.

Those tempted to let their house out, not only to visiting global dignitaries but also for events such as the Cheltenham Festival, the British Grand Prix at Silverstone, and even Wimbledon fortnight, could find themselves not only liable for tax on the rental received but also required to sign up for Making Tax Digital.

Making Tax Digital (MTD) is a long mooted HMRC initiative which requires businesses, the self-employed and landlords to manage their tax affairs online.

Landlords earning over £50,000 in the year to 5 April 2025 will be required to submit quarterly updates to HMRC from 6 April 2026.

The first quarter will cover 6 April to 5 July and your MTD return must be filed by 7 August 2026. 

The thresholds drop to £30,000 for the year to 5 April 2026, and to £20,000 for the year to 5 April 2027, bringing more and more people within the scope of MTD from 6 April 2027 and 6 April 2028 respectively.

You must also supply a year end summary, which will form part of a replacement to the normal self-assessment tax return as HMRC creeps further towards tax digitisation.

The good news – you will not have to enter making tax digital until after you have submitted your first self-assessment, and not at all if you are “digitally excluded” (on the grounds of age or religious belief).

And leaving digital reporting aside, there may still be tax assistance for those renting their homes.

Rent-a-Room relief may apply to the income generated. If the income in question is as a result of providing accommodation in your only, or main, residence, then there is no tax to pay if the gross rental income is less than £7,500 per annum.

 If it is more, then the first £7,500 of income is exempt.

Gross income includes other services provided, such as housekeeping including cleaning and laundry, chauffeurs, nannies, concierge, chefs, sommeliers, security, and all other essential minutiae of modern living.

Another potential income stream, particularly applicable to anyone near Prestbury Park in Cheltenham Festival week, is “occasional land letting” – for example, renting out your driveway for parking near the racecourse, or opening your garden for parties.

A £1,000 annual property allowance is also available, although not to enhance the Rent-a-Room allowance – eg. on independent lettings of land.

So whether it is JD, Usha, Ewan, Vivek and Mirabel, who want to rent your property for their vacation, or someone looking for relaxed accommodation away from packed and heaving hotels, it pays to take professional advice and ensure you understand the implications of renting out your property, the implications for your tax bill and if and when any payments will fall due.

To discuss this further, contact [email protected] or call 01242 234421, and for further information, go to Making Tax Digital for Income Tax | Crowe UK