Airbnb Lettings Income Under Attack From HMRC
It has become apparent that Airbnb are now disclosing details of landlords property income from Airbnb lettings to HMRC.
This data allows HMRC to begin enquiries into the tax affairs of landlord’s who have not declared their property income for 2017/18 and 2018/19. The deadline for opening an enquiry into a self-assessment return for 2018/19 is 31 January 2021, if the return was issued and submitted on time.
HMRC is reported as saying it will address any issues over the landlords’ payment of tax in 2021/22. The terms surrounding the discovery rules will also allow HMRC to look further back, even up to 20 years in some cases.
What to declare
The Airbnb insight report for 2017/18 says the annual earnings from Airbnb by a typical UK host is £3,100, (£3,800 in Scotland). This lies within the rent-a-room relief allowance of £7,500, so the landlord would not need to declare any property income for that year.
However, letting a second or third home that generates income in excess of £1,000 in a tax year will create a tax reporting obligation. The £1,000 limit is the miscellaneous trading income annual allowance that can apply to letting income that doesn’t fall within rent-a-room relief.
How do I let HMRC know about my additional income?
If the landlord hasn’t declared their rental income and it is not covered by rent-a-room relief or the miscellaneous trading income allowance, this can easily be rectified.
Where the taxpayer has already submitted a 2018/19 tax return to HMRC but would like to make an amendment, this can be done up until 31 January 2021.
Where the omitted property income or gain relates to earlier tax years the taxpayer should consider disclosing under HMRC’s let property campaign.
This service has been running for over seven years, but it is only open to those who let residential property within the UK. It can’t be used to declare income from non-residential property or where the property has been let through a company or trust. Where the let property is located overseas the worldwide disclosure facility should be used.
The benefit in using the let property campaign is that the penalties charged for non-disclosure will be significantly lower than if the taxpayer waits for HMRC to begin an enquiry. If full disclosure and payment of the tax is made before HMRC spots there is an issue, the penalty can be reduced to nil.
If you have received income from Airbnb lettings that you have not declared then contact us now for advice and assistance in bringing your tax affairs up to date—flourish@balance online.co.uk