It has been announced that Airbnb will share data with HMRC about the earnings of hosts using its UK platform for the tax years 2017/18 and 2018/19. Having this data to hand will enable HMRC to launch targeted enquiries into the tax affairs of those individuals who have not declared their lettings income for those years.
Who may be caught up in any such review? The average earnings by a typical Airbnb host is just over £3,000. This lies within the Rent A Room Scheme threshold of £7,500 per annum for anyone letting out part of their main home. However, letting additional property that generates in excess of £1,000 per annum of income does create a tax reporting obligation.
What should you do if you haven’t been declaring your rental income earned through Airbnb? We would strongly recommend that this be quickly corrected.
Where you have submitted a tax return, and it is still in date for amendment, it should be amended without delay. The 2018/19 tax return can be amended through until 31 January 2021. Where the missing income relates to any earlier tax years, you should consider making a disclosure under HMRC’s Let Property Campaign.
The advantage in using the Let Property Campaign to disclose undeclared income is that the penalties charged for non-disclosure will be much lower than if the you wait for HMRC to contact you. If full disclosure and payment of the tax is made before HMRC spots there is a problem, the penalty may be reduced to £Nil.