Online lettings firm Airbnb agreed to provide HMRC with details of its hosts’ income, which may increase tax investigations.
The Grunberg & Co has warned Airbnb landlords that HMRC may be investigating them following the agreement 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.
Airbnb has passed on the financial transactions of 225,000 people who rent out homes and rooms through its site. It could potentially result in landlords having to pay substantial bills. Particularly those who operated multiple properties using the site.
Moreover, HMRC’s investigation could result in a significant withdrawal of landlords from the short term letting sector. They will feel that short term letting market is not for them. Although short term lets have higher rents but also greater costs in terms of managing the property.
Airbnb has faced pressure from governments and regulators around the world to ensure that their users pay the appropriate taxes.
Alexander Kossoff, a partner at Grunberg, said:
“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.”
“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.”
Hosts and landlords should, therefore, consider making a disclosure and payment to HMRC for any outstanding tax that is due.”
Taxpayers who have already submitted tax returns for 2018/19 should be able to amend it before 31/01/2021.