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Home swapping holidays – beware of possible hidden tax.

Home swapping is becoming an increasingly popular way to holiday – with the attraction of high-quality accommodation at a much-reduced cash cost.

In the 2006 film, The Holiday, Kate Winslet swapped her Oxfordshire cottage for Cameron Diaz’s Hollywood home.  Whether Kate was aware of the possible tax implications or not, it is important that ‘swappers’ now are.     

In the UK, home swapping is considered to be a commercial activity – as it generates income from land.  The value of the accommodation received (the Hollywood home in Kate’s case) is deemed to be a form of taxable income, in the same way a normal rental income would be.

If the value of qualifying receipts (including in non-monetary form, like swapped holiday accommodation) are worth less than £7,500 annually, then no tax should be payable.  However, if the value exceeds the threshold of £7,500, there may be income tax to pay on the full value. 

We may not be talking huge amount of tax in reality and there is no evidence that ‘swappers’ are on the HMRC radar (certainly not to the same degree that wider short-term let property landlords have been).  However,  that could easily change if popularity continues, so its important to get the reporting right.

Contact us

If you’re thinking about home swapping, or anything to do with property rental, our private client team know all about the tax implications. Feel free to get in touch.