Instead of working a second job, this article explains how you can use your assets to make some much-needed cash. We consider:
- What you can rent out to make some extra money
- Things to consider before renting out property
- Income tax, permission to rent and insurance
- Money-earners under your nose
At a time when many Britons are struggling to make ends meet, they are often sitting on a fortune which they could exploit to make some extra money. We start by giving you some ideas of what you could do with your assets before looking at the tax implications. What other issues do you need to take into account before following one of our suggestions?
What can you rent out to make some extra money?
A spare bedroom
If you have a spare bedroom in your home, you could rent it out to a lodger. The government’s Rent A Room scheme allows you to earn £7,500 a year before this extra income is taxed. You are only eligible for the scheme if you offer furnished accommodation in your main or only residence. If it involves sharing a bathroom, kitchen and/or living room (also known excluded occupancy), no eviction is necessary. However, you are expected to give the lodger reasonable notice if you wish them to leave. This is usually the length of the rental payment period.
Before setting a price, think about how much their share of household bills would be and don’t forget to calculate their Council Tax too.
If you are reluctant to have a permanent lodger, there are schemes which cater for lodgers who require accommodation during the week. Perhaps because they’re working temporarily in your area. It’s also possible to rent out a room to foreign students who are attending foreign language courses, primarily in the summer. The main advantage of such schemes is that it still gives you and your family some privacy.
Whatever storage space you have in your home could also be turned into a money-earner. Although there will always be demand for larger spaces such as attics, lofts, garages or garden sheds, some people only need closet space. There are online sites where you can list your storage space with information about its location, size and if possible supply a photo. You should also set a price.
Sites recommend you should make it 40-60% cheaper than commercial storage units, and possibly arrange a discount for longer rentals. These sites will take a commission of around 15%, but they will also be responsible for all advertising, vetting those renting and also undertake the payment on your behalf. Viewings are usually arranged through the site’s personal message system.
It is possible to make money by renting out your vehicle on days when you’re aren’t using it. There are a number of sites where you can list your car and include a short description, your location and a photo. The price you stipulate for renting your car would depend on its make, model and year of registration. You should also complete the site’s availability calendar and make sure that it is regularly updated. Rental requests are made online along with arrangements for handing over the keys. At both the beginning and end of the rental period, vehicles are inspected by both parties, and the mileage is checked.
Your driveway or garage
There is always demand for affordable and secure parking in most places in the UK, and this is especially true if your home is located:
- in a large urban area
- near a train or tube station
- near a sports stadium, airport or concert venue
- in an area with residential parking restrictions
There are many online marketplaces which offer parking places according to postcode. You list the parking space you have with a description of its location, photos, price, availability and also include a photo. Rentals could be hourly, daily or even long-term for people who commute. Joining these marketplaces costs nothing, and you only pay when people rent your parking spot. You are usually notified via an email and/or text message. These sites also arrange for payments to be made to you by bank transfer or PayPal so you don’t have to worry about not being paid.
Your personal belongings
You probably own a large number of items which were expensive to purchase, but which you don’t need to use every day. They might be things that you don’t wish to sell as they might still come in handy. Such items include bicycles, tools, gardening equipment, specialised equipment for hobbies (like fishing tackle, cameras or camping gear), barbecues and even clothing like tuxedos or fancy dress costumes.
Many people who are strapped for cash will often pay you money to rent these costly items for the day, week or even longer. There are specialised websites which allow you to list these items with a short description, price and photo, and in return they will take commission of around 15%. Sites often suggest that you check the person’s ID and ask for a deposit when renting your personal possessions.
If you have a larger garden and you have little time to maintain it, people are always willing to rent outdoor space to be used as allotments because council waiting lists are so long. To be suitable, your garden should have direct access from outside (rather than going through your home.) Instead of asking for an annual rental fee, you could ask for a share of the produce.
Things to consider before renting out your property
You are allowed to make up to £1,000 on property/assets before you need to declare the extra income to HMRC. You should keep a copy of all receipts so you can check you don’t exceed this tax-free allowance.
Asking for permission to rent
If you have a mortgage, you should consult your mortgage provider before taking part in any of these money-making schemes. It could be against the terms of your mortgage agreement. Similarly, if you’re a tenant, you should speak to your landlord before renting out any part of their property. Some rental contracts explicitly forbid sub-letting.
Your insurance providers
Your insurance provider should also be consulted before you rent out property as this might have implications if you later wish to file a claim. A lodger’s belongings or things in storage won’t usually be covered by your home contents insurance.
When renting out your car, the online marketplace will have its own insurance scheme to cover the period when your car is being driven by someone else. In this way, you can protect your no-claims bonus. You are, however, responsible for the maintenance of the vehicle and break-downs aren’t usually covered by this policy.
Conclusion – Money-earners under your nose
There are many ways to earn supplementary income without taking on a second job. These marketplaces are now worth an estimated £8 billion a year in the UK with participants making an average of £1,700 a year. Isn’t it time you thought about joining this sharing economy?