GETTING STARTED IN HOLIDAY RENTALS Chapter 1b

In this chapter (1b) we will cover insurance, tax implications, business rates, research and profit tips. Getting these sorted might initially seem like quite a daunting and complex process, but don’t worry - we’ve got you covered with expert advice to help give you a head start.

INFORMATION FROM GARY HODGSON AT HODGSON INSURANCE Insurance cover for your B&B, guest house or holiday home is a vital cog in the safe running of your business and for peace of mind should the worse happen. Here we give you some of our knowledge and tips when searching for insurance:

1) START WITH THE RIGHT POLICY

• Make sure your business is insured on a specialist guest house package policy.

• We see quite often customers have taken out a standard home policy via an online comparison site, and believe the public liability cover will cover them for taking in guests because they put down they’re B&B owners.

• A standard home insurance policy will not give you the correct liability cover to safeguard you against guests staying.

• Don’t try and obtain a public liability policy for guests separate to your main home insurance, thinking you’ll keep prices down.

• Always look for a single package policy that will include the correct liabilities and combine other main covers like buildings and contents.

2) WHERE TO OBTAIN THE RIGHT POLICY?

• We would always recommend speaking to an insurance broker.

• A broker should have access to a panel of specialist guest house schemes.

3) MAIN COVERS TO INCLUDE

• BUILDINGS: If you own the property then include the buildings, this must represent the full rebuilding cost of the property, should for example, it completely burn down.

• CONTENTS: Most guest houses are owner occupied, if that’s the case make sure the policy includes not just business contents, but also includes cover for your personal contents. Some policies include this altogether, but some insurers it can be included as an optional extra

• PORTABLE CONTENTS: In addition if you wish to include portable contents outside the home like jewellery, mobile phones etc, then again this an optional extra that only a few insurance companies provide.

• PUBLIC LIABILITY: A specialist B&B or guest house policy will automatically include Public Liability cover for your guests should they get injured or maybe food poisoned whilst staying. The limits will generally be £2 or £5 million.

• EMPLOYERS LIABILITY: If you intend on employing staff, even temporary staff, then you legally have to include Employers Liability cover. This will protect you should an employee injury themselves whilst working for you. Not always automatically included, so if you have staff make sure this is included. Employers Liability cover limits should always be £10 million.

• BUSINESS INTERRUPTION: If, for example, a burst water pipe causing flooding in bedrooms, you may not be able to rent those rooms out for a number of weeks or months.Business interruption covers you for loss of income due to an insured peril like escape of water or a fire. A vital part of a business insurance policy, some smaller B&B policies may not offer this cover or only offer as extra.

Other not so vital covers will either be included or you can pay extra for, but the above are main areas you must look at.

Vat

What are the rules if the property is sold without VAT?

• Advantage of VAT - Maximum rule.

• Need to charge 20% more

INFORMATION FROM MATT BRYANT AT OCL Accountants

When running a guest house, B&B or any other kind of hospitality business, there are many important factors to consider, and one of the most important things to think about is tax, particularly VAT.

• Many small businesses are unsure whether or not they actually need to register for VAT.

• If your earnings from the property are over £85k then you must be VAT registered.

• To check the current threshold you can either ask your accountant or go to https://www.gov.uk/vat-registration

From your effective date of registration, you must:

• Charge the right amount of VAT

• Pay any VAT due to HMRC

• Submit VAT Returns

• Keep VAT records and a VAT account

Most VAT registered businesses that earn over £85,000 must also follow the rules for ‘Making Tax Digital for VAT'. Your accountant should be able to assist with VAT, from finding out whether you have to register, deciding on a suitable VAT scheme and preparing the VAT returns.