Whitley Stimpson recommends transparency over taxable lettings income to Airbnb hosts in order to avoid penalties.
What information is HMRC receiving from Airbnb?
HMRC has been data scraping for years regarding property income and gains from various sources. However, Airbnb UK’s latest company accounts contain a statement shared with HMRC on the individual earnings of hosts during 2017-18 and 2018-19, meaning it will no longer need to search for this information.
How this will affect Airbnb hosts
If you’ve not declared your letting income for 2017/18 and 2018/19 it’s worth thinking about it because HMRC can use the new information from Airbnb UK to launch targeted enquiries into your tax affairs.
The deadline for opening enquires into tax returns for 2018/19 will be 31 January 2021, but HMRC are allowed to go back as far as 20 years if they want to, using the discovery rules.
Airbnb hosts will need to declare rental income in some cases
If you’re an Airbnb host and you only let out part of your main home and your annual earnings from Airbnb don’t exceed the rent-a-room relief allowance of £7,500, you won’t be required to declare these on your self-assessment tax return.
However, Owen Kyffin tax expert at Whitley Stimpson explains:
“If you let a second or third home that generates income of over £1,000 in a tax year you will need to declare those earnings on your tax return. Earnings below £1,000 will come under the trading and miscellaneous income annual allowance so won’t need to be declared.”
What Airbnb hosts can do now to avoid penalties
If you’re an Airbnb host, you haven’t declared your rental income and you aren’t covered by the rent-a-room relief, or the miscellaneous trading income allowance, you should look at correcting this as soon as possible.
Amending 2018/19 tax returns
If you’ve submitted a tax return for 2018/19 you can make amendments to this until 31 January 2021.
Making a disclosure for earlier tax years
If you’re concerned about earlier years of omitted property income or gain relating to a UK residential property, you should consider making a disclosure to HMRC for the unpaid tax under HMRC’s let property campaign. However, if your let property is located overseas you should instead use the worldwide disclosure facility.
“If you make a disclosure rather than waiting for HMRC to contact you, the penalties charged for non-disclosure will be considerably lower. Furthermore, if full disclosure and payment of the tax is made before HMRC notices the problem, you may have the penalty completely withdrawn.”
If you’re concerned about this, we can contact HMRC on your behalf. Please contact Owen Kyffin, director and tax expert at Whitley Stimpson Owenk@whitleystimpson.co.uk