AIRBNB HOSTS TARGET BY HMRC INVESTIGATION

UK Airbnb hosts suspected of not declaring their rental earnings are facing a potential tax investigation from HMRC that covers six years of income information, as part of a wider crackdown on the sector’s activities by the UK tac authority.

It comes as Airbnb was forced to share the income details of all UK hosts on its platform dating back to the 2017-2018 financial year with HMRC, which has set out to identify owners who rent out their properties as short-term lets without declaring how much they are earning each year.

HMRC reported that it had sent 800 letters since February to hosts that it believed had not paid sufficient tax, following previous suggestions by the Treasury that more than 50 per cent of owners did not realise it was necessary to pay tax on their incomes earned from renting out their properties.

Airbnb hosts have been made aware that their data is being disclosed to HMRC and the company is promising to support them when it comes to understanding tax compliance and their obligations.

Under the current laws, since data sharing began back in 2018, hosts renting out properties through online rental platforms are able to make £1,000 a year before tax under a ‘tax allowance’, with any profits above that amount needing to be declared to HMRC. However, those renting out a single room in their property have a much higher income threshold of £7,500 before they have to pay tax as part of the government’s ‘Rent-a-Room’ scheme.

However, those who fail to pay their income duties are being warned that they could face criminal prosecution as well as strict penalties of up to 30 per cent of the tax they owe. Should HMRC uncover evidence that hosts have not paid any or enough tax in previous financial years, it would also have the authority to open an investigation to obtain evidence dating back 20 years under so-called ‘discovery laws’.

Hosts or owners deemed to have made an innocent error or to have been careless could potentially face no penalty at all, though those deemed to have made deliberate errors in disclosing their incomes would likely face harsher penalties and possible criminal charges.

If you believe you may be affected by this and need any help disclosing income to HMRC, please contact us at 01492 593345.