Q: I have a sharer who pays me a £80 a month, and she rides my horse twice a week. A rough estimate of my monthly outgoings for my horse is £205. I calculated my sharer’s contribution by taking into account the amount I paid when I was a sharer, and the fact that, if she rode twice a week at my local riding establishment, it would cost her £160 and she would spend less time in the saddle. Are there any legal and/or tax implications associated with this ‘extra income’, as I work full-time in a salaried job?
Rebecca Hewitt, a trainee solicitor at Darbys law firm which specialises in equine law, answers: Generally, owners who share their horses are not operating a business and therefore the income is not taxable. Most people share their horse simply to help towards keep or to help the horse stay fit if the owner has other commitments.
If you are at all concerned, then you should prepare and keep an income and expenditure account for the horse and apportion the expenses between yourself and the sharer.
In this particular case, the sharer has the use of the horse for two days per week and should therefore be responsible for 2/7 of the expenditure. On the basis of the figures you have provided, a small profit is being made each month, as 2/7 of £205 is less than the £80 that is being received.
Have you included regular expenses, such as worming or vaccinations? It is likely that once in a while your horse will require a vet for an unforeseen reason, which may increase the expenses beyond that of the small profit being made. Also consider the cost of equipment for your horse, such as tack and rugs.
Other considerations when sharing should be where the responsibility lies for insurance and veterinary fees if the horse suffers an injury. When assessing this, you should ask yourself the following questions:
- Is the sharer insured to cover injury to the horse or any third-party damage while she is riding it?
- Does your insurance company know that you are sharing your horse with another rider?
- Does this affect your insurance policy and increase your premium?
- Should the sharer be held responsible for an injury to the horse if it occurs while she is riding it?
Preferably, these points should be addressed in a written share agreement, along with confirmation that the money received from the sharer is a contribution towards the upkeep of the horse.
If you have any doubts, consider consulting an accountant or speaking to the Inland Revenue directly.
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