Airbnb hosts - even those using just a spare room for occasional letting - will be amongst those subject to new reports sent to HM Revenue and Customs.
From January 1 Airbnb and other short let platforms will be required to send data on their clients’ earnings to HMRC.
The rule will apply not just to short let platforms but other so-called freelance systems in the gig economy, such as those for freelance taxi service Uber and freelance online content service Fiverr.
HMRC will then use this information to identify taxpayers who may be under-reporting their income. If HMRC finds that a taxpayer has not reported all of their income, they may be subject to a penalty of up to 30 per cent of the tax owed - in addition to paying the outstanding tax itself - or ultimately prosecution.
The Revenue says an estimated £1.2 billion in tax is lost each year due to evasion in the gig economy.
Earlier this year Airbnb posted on its website a warning that it was sharing data with HMRC, going back as far as the 2017-18 tax year.
However, anyone letting complete properties on Airbnb can only make up to £1,000 a year before tax, which is protected by the ‘trading allowance’ while any profits above this threshold must be declared.
Those letting a room only via a short let platform or through some other system, and abiding by the rules of the government’s Rent A Room initiative, can earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation. This is halved if the person shares the income with a partner or someone else.
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For taxi drivers this certainly isn't new. I got my Private Hire licence on 27th March 1997 and the Council immediately notified HMRC. I had to submit a tax return for that year, even though there were only 9 days remaining in it.
Gig economy jobs are often fairly well paid once someone knows how to target the most productive hours. Even something like food delivery riders can have very respectable earnings. If people don't work within the system they won't be able to access loans or mortgages so they're making their own lives unnecessarily difficult.
Ultimately HMRC aren't stupid. They know roughly how much people working in any given industry should be earning. How much other people declare for doing the same job.
In this day and age of internet bookings, online platforms, online advertising and internet banking it would be incredibly hard to hide most rental or gig economy income.
Anything but go for the big boys
They have gained tips from the Stasi 😨 , they will hunt down any strays as desperate former PRS landlords run from the AST debacle 😎☠️☠️😂
If you want to sleep easily, then give HMRC a little more than they are entitled to, not less.
And when I set rents, I charge the tenants a little less than they expect to pay, not more. I have never had a tenant default on a penny of the rent, and my relationships with my tenants are generally very good from the outset. The last flat I let came back to me in immaculate condition, too, and I received a very nice present.
The principle of a good house at a reasonable rent is a good one, and one we have followed. However it does not always work as I have found out at great cost (financial and mental) recently.
So sorry to hear that, Emily!
I do understand; if you get the wrong tenants it doesn't matter how good a deal you are giving them.
Yes that's always been my strategy too. Have mostly had good tenants but with one exception, a young couple with young children, rent arrears and trashed the place, never again.
I bet HMRC love you Ellie. Why should we give them more than they're entitled to when they're already taxing us unfairly and differently to other businesses.. Give them what they're due and not a penny more!
There may be grey areas, Shane e.g. capital improvement or replacement. I calculate on the basis of what can't be questioned, and therefore won't worry me.
I do feel that I pay a great deal of income tax, but that may be temporary because of the Renters Reform legislation.
No problem with everyone paying fair tax. Problem is it's not fair and they pick off the easy targets. I vote for putting more effort into the big corporations that seem able to get away with not paying their fair share.
I'd be more in favour of going after the cash in hand mob.
It's easy to say companies like Amazon should pay more tax (meaning corporation tax) while overlooking the fact they create vast amounts of employment which creates huge amounts of Income Tax and NI receipts, while also saving a significant amount of UC. Many of the jobs are unskilled and ideal for the people everyone seems to think should stop being on benefit and actually get a job.
Cash in hand is just corrosive. It traps people into feeling dodgy. Constantly looking over their shoulder wondering if they'll get caught. Some are sensible enough to make it a small percentage of their income, others their entire earnings while also claiming unemployment benefits or even more stupidly not claiming anything and also not declaring an income of any sort. Often they would actually be better off registering as self employed and claiming all their tools, etc as tax deductible expenses, while possibly legitimately qualifying for top up UC.
If it is going to raise that much then why don't they look at Covid loans, estimated 6-10billion lifted by cheeky chancers.
This is low hanging fruit and should be dealt with first, forget this airbnb lot or if you do want to deal with it then make it later.
Yes Peter the Covid loans scam I know of a few that took these with no intention of ever paying them back, this is where HMRC and government should be looking first
Bounce back loans, i looked at one and it was relatively difficult to access one. However it seems that certain groups were allowed to milk it. Chancellor Rishi chucked away a lot of money, and not just that, what about track and trace? etc.
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