Did you know that Airbnb and HMRC are sharing data and that hosts have to declare their income to HMRC, much like a landlord with a normal rental tenant?
Back in 2020, Airbnb declared that they would be sharing the income data from 225,000 UK hosts with HMRC, which resulted in an increase in the number of people that had their rental earnings brought under the HMRC microscope.
It’s never been more important than now to ensure that you are following the latest HMRC rules when it comes to reporting your rental income from an Airbnb letting. If you are unsure about what information to disclose to HMRC, you can visit the Airbnb website for help or keep reading.
Airbnb and HMRC, data sharing
Airbnb’s data sharing with HMRC means they started reporting host earnings from the 2017/18 and 2018/19 tax years in their January 2019 accounts. But it does not stop there – HMRC can also enquire into tax returns for four previous tax years, or even go back up to 20 years if they believe you’ve deliberately filed an incorrect tax return.
Now that HMRC has access to landlords’ payments and Airbnb earnings, it will be able to use its powers to open up enquiries if it believes hosts haven’t been meeting their tax obligations.
Tax on your Airbnb income
Airbnb hosts have varying tax thresholds depending on how they let their property and they may be required to declare any income earned on their personal tax returns. The earnings data shared by Airbnb goes back as far as the 2017-18 financial year.
Airbnb have been transparent in respect of their data sharing with HMRC and Airbnb hosts are aware that their data is being shared, and to their credit Airbnb, is offering help to property hosts to help them understand the tax implications and follow the rules.
Airbnb is not the only online rental platform in the spotlight, HMRC is currently working with a range of online rental platforms to ensure that their users also pay the correct amount of tax.
An Airbnb spokesman recently told Sky news “Hosts want to pay their fair share of tax and we want to help, which is why Airbnb partners with industry experts across the UK to help hosts understand and follow tax rules,” He went on to say “We also work with HMRC to share information and help ensure that UK authorities receive the taxes they are due, in accordance with UK laws. The typical UK host shares their own home for just two nights a month, and one in three say the extra income helps them afford rising living costs.”
What are the rental property rules?
People renting properties through the Airbnb are able to make £1,000 a year before tax – any profits above this have to be declared. However, for those renting out a single room in their house, the threshold rises to £7,500.
It is important to note that those who fail to pay income duties could face criminal charges as well as penalties of up to 100% of the tax they owe.
Depending on your circumstances, if your income exceeds the Rent-a-Room relief allowance or the miscellaneous trading income allowance and you haven’t reported this to HMRC, it should be disclosed at the earliest opportunity to avoid significant fines.
If you have omitted some or all of your residential property income for earlier tax years, you should consider disclosing information under HMRC’s Let Property Campaign.
If you would like to discuss the voluntary declaration of previously undisclosed rental income or indeed any area of rental property taxation, including holiday lets, Airbnb rentals, or any online property rental site, contact us today to arrange a confidential, no obligation meeting and discuss how our RPGCC’s property tax experts can help you navigate the minefield of rental property income.