HMRC Receives Airbnb Letting Data
We all know Airbnb are the place where we can find rental properties that range from fantastically kitsch to extremely luxurious, however what we weren’t aware of is that the Airbnb accounts for the year to 31 December 2019 include a statement that the company will share data with HMRC about the earnings of hosts (those who let out property) on its UK platform in the years 2017/18 and 2018/19.
With that said, it’s important for Landlords to realise that HMRC will know about their lettings through Airbnb, so full disclosure of all their taxable property income is essential, including for all prior years.
The Airbnb data will allow HMRC to commence enquiries into the tax affairs of individuals who have not declared their lettings income from Airbnb UK for 2017/18 and 2018/19. Although the deadline for opening an enquiry into a self-assessment return for 2018/19 is normally 31 January 2021, the discovery rules allow HMRC to go back much further, in some cases up to 20 years. Landlords who have not declared any letting income through Airbnb UK should think about doing so immediately.
HMRC is reported as saying it will address any issues over the landlords’ payment of tax in 2021/22. This clearly indicates that HMRC expects to recover significant revenue and will be using its discovery powers to open up tax enquiries going back several years.
What to declare?
The Airbnb insight report for 2017/18 says the annual earnings from Airbnb by a typical UK host is £3,100. This is within the room-a-room relief allowance of £7,500 and would not result in a tax reporting obligation for a host who only lets out part of their main home.
However, letting a second or third home that generates income in excess of £1,000 in a tax year will create a tax reporting obligation. The £1,000 limit is the trading and miscellaneous income annual allowance that can apply to letting income that doesn’t fall within rent-a-room relief.
How to declare?
If the landlord hasn’t declared their rental income, and it is not covered by rent-a-room relief or the miscellaneous trading income allowance, this situation should be swiftly corrected.
Where the taxpayer has 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 by the taxpayer until 31 January 2021.
Where the omitted property income or gain relates to earlier tax years the taxpayer should consider speaking to a qualified tax professional to advise them about making a disclosure using the HMRC’s let property campaign. The LPC is a disclosure service has been running for several years but it is only open to individuals who let UK residential property. It can’t be used to declare income from non-residential property or where the property has been let through a company or trust. Where the let property is located overseas the worldwide disclosure facility should be used.
The advantage in using the let property campaign to disclose is that the penalties charged for non-disclosure will be much lower than if the taxpayer waits for HMRC to contact them. If full disclosure and payment of the tax is made before HMRC spots there is a problem, the penalty can be reduced to nil.
The campaign is open to individual landlords renting out residential property. This includes you if you’re:
renting out a single property
renting out multiple properties
a specialist landlord, eg student or workforce rentals
renting out a room in your main home for more than the 'Rent a Room Scheme' threshold
living abroad and renting out a property in the UK
living in the UK and renting a property abroad
renting out a holiday home even if you use it yourself
If you are uncertain about whether you should make use of the Let Property Campaign and need a bit of advice, or you would like to find out more about how to declare your rental income, contact our Tax Partner and ex HMRC officer - Neill Staff at firstname.lastname@example.org who will be able to advise.