Foreign AirBnB property

I am a consultant operating as a Sole trader and I have an apartment in Portugal that I occasionally rent out on AirBnB. I have a Portuguese bank account and all expenses of running the apartment and any income go to the Portuguese Bank. I have imported everything, but there are accounting questions…!

VAT:- I am not registered for VAT in Portugal, only in the UK. Presumably I tag everything as zero VAT?, or is there a better way.

Should I tag all expenses and income to Portugal Apartment Project? Or 2 projects… PT expenses, PT income?

What else should I ask? Accounting does not get me out of bed in the morning !

Hi @Rory ,
Not a straightforward one this…
If you are registered for flat rate vat, then all income, including property rent, is subject to vat. Hopefully, this is not you. Property income is not normally subject to VAT.
It sounds like it’s not Furnished Holiday Let income but should be declared as property income on your Tax Return. It’s not part of your self employed income so it needs coding separately in Quickfile away from the Profit and loss and preferably via capital introduced or a separate code in the software.
You are best speaking with your accountant to get clarification.

Thank you, Bagpipe…
It is more a question of how to tag the bank entries so that it ends up in the right place for my accountant and does not screw up my VAT.
Maybe I should run it as a separate entity?

Eventually under Making Tax Digital for Income Tax, starting in 2024 this income will need to be declared separately to HMRC i.e. An additional report as well as self assessment. For now, I would suggest creating a new nominal code of say 3105 and calling it foreign property. You can then tag all ins and outs to this one code for your accountant to look over. He can pull together the data for your Tax Return by analysing this one code.

Thanks again. I’ve yet to learn where to play with nominal codes.
….and if I put them in at zero VAT and to a 3105 nominal code it will not inflate my UK VAT purchases?

You can tell I am not familiar with accounting procedures!

The nominal code 3105 is not reflected in your VAT purchases

If you tag things directly to the nominal code via “something not on the list” then they won’t figure in your vat returns. If you create purchases then those will always count in box 7 regardless of what category (i.e. nominal) you assign them to, unless you tick the out of scope checkbox.

Thank you, gentlemen.
Sounds like there is scope for me to get it wrong. As you will have gathered, I am on the steep part of the learning curve… Would there be some way of picking up the error, or making some rule that would prevent payments in Euro getting into UK VAT? Presumably the same would apply to purchases using my Revolut card in EUR, CHF, CZK, USD or JPN. These would be legit travel expenses.

HI @ian_roberts
Good that you have clarified the way to avoid appearing in Box 7 on the VAT Return for Rory.

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