Hi Luna, it is taxable - driveway rental is property income, just like rent from a room or a flat. The good news is there is an allowance that may cover part of it, and the non-tax angles are the ones to watch.
1. Tax treatment and the £1,000 property allowance
HMRC gives everyone a £1,000-a-year property allowance. If your gross property income (before expenses) in a tax year is £1,000 or less, you do not need to tell HMRC. At around £150-£200 a month (roughly £1,800-£2,400 a year), you would be above that line, so the income must be declared.
You then have a choice: deduct your actual allowable expenses from the gross rent, or claim the £1,000 property allowance instead of adding up expenses - whichever gives the lower taxable figure. You cannot claim both. Keep records either way: a simple log of payments received, any platform statements, and receipts for expenses.
One thing that does not apply here: the Rent-a-Room scheme. That only covers furnished accommodation let in your home, not parking spaces.
2. Do you need to tell HMRC?
Yes. HMRC's position is that if your gross property income is over £1,000 but no more than £2,500, you should contact them, and over £2,500 you register for Self Assessment. In practice, registering for Self Assessment is the cleanest route either way - the rental income goes on the property pages of the return, with the online filing and payment deadline of 31 January following the tax year.
3. Mortgage and insurance - check both before you start
Most residential mortgages require the lender's consent before you use the property commercially, even something as modest as a parking space, so check your mortgage terms or ask your lender. On insurance, tell your home insurer: regular third-party vehicles on your property can affect buildings and contents cover, and you may want to think about public liability cover in case someone is injured on your driveway. Neither is a tax point, but both can bite if ignored.
4. Platform vs. direct
No tax difference - the income is taxable either way. A platform may deduct commission or fees, and those fees are deductible expenses (or they simply reduce the gross against which the £1,000 allowance is assessed). Platforms also generate statements, which make your records easier. Going direct to a neighbor is fine too; just keep your own log of payments.
