An accountancy firm is warning Airbnb landlords they may be investigated following a decision by the short lets platform to share data with HM Revenue & Customs.
The Grunberg & Co accountancy practice says that in reporting its tax affairs to HMRC - in the shape of its accounts to December 31 last year - Airbnb has also agreed to share data for the two preceding tax years.
Alexander Kossoff, a partner at Grunberg, says so-called ‘hosts’ for Airbnb may wish to ensure their tax affairs are in order as a voluntary disclosure to HMRC could help to reduce any potential fines.
“According to previous reports from Airbnb, it estimates that the average annual earnings for a typical host are just over £3,000” says Kossoff.
“Where someone uses the service to let part of the home that they live in they may be able to take advantage of the Rent-a-Room relief allowance of £7,500, which means they do not generate a tax reporting obligation below this amount.
“However, those hosts that rent out a second or third home, rather than part of their main home, cannot benefit from this same relief.”
He adds that any amount over the allowances would, in most cases, result in a tax reporting obligation via a person’s annual Self-Assessment tax return.
And he warns: “Airbnb’s decision to share income data with HMRC could lead to a rise of investigations against hosts if the tax authority feels that tax is outstanding. Hosts and landlords should, therefore, consider making a disclosure and payment to HMRC for any outstanding tax that is due.”
Those taxpayers who have already submitted a tax return for 2018/19 should be able to amend it before January 31 next year.
However, where a person has omitted some or all of their residential property income for earlier tax years, they should consider disclosing information under HMRC’s Let Property Campaign or where property is located overseas, via the Worldwide Disclosure Facility.
“By making a voluntary disclosure to HMRC, a taxpayer can reduce a potential fine or a costly investigation. In some cases, where they act quickly enough, they may only be required to pay the outstanding tax amount” he concludes.
“With the ever-changing rules around property tax, it is certainly worth reviewing your property income to ensure that you are not only paying the right amount of tax but also to check that there aren’t reliefs or allowances that could help to reduce the charge that is due.”