HMRC have access to Airbnb host earnings
HM Revenue and Customs (HMRC) now has access to the income of Airbnb hosts which highlights how important it is for landlords to be transparent about their income.
The Airbnb UK company accounts to 31st December 2019 contained a statement shared with HMRC on the individual earnings of hosts from 2017 to 2019.
This information on the hosts will enable HMRC to launch tax investigations into individuals who have yet to declare any income from their Airbnb lettings in the relevant tax years.
Usually, HMRC have 12 months from the date of submission to launch a formal enquiry into an individual’s 2018-19 self-assessment tax return, so the time has now passed for that tax year.
However, under the HMRC discovery rules, they have authority to delve deeper into a property landlord’s tax affairs – going as far back as 20 years if needed!
It is clear that HMRC will seek to very actively pursue undeclared income from Airbnb hosts ongoing.
There is good news though. In the 2017-18 tax year, the Airbnb’s report suggested indicates that the average annual earnings for a UK-based host was £3,100 (up to £3,800 in Scotland). As individuals have a £7,500 rent-a-room relief allowance many will therefore not have any problems and no need to file a return.
However, many Airbnb hosts let out second or third properties and those earning income of more than £1,000 during a tax year are obliged to report this via Self Assessment.
Amendments for 2018-19 self-assessment are no longer possible, but amendments for the 2019-20 tax year can be filed until 31st January 2022.
HMRC Let Property Campaign
If income from Airbnb and other lettings relates to the 2017-18 tax year or even further back, taxpayers are urged to disclose this voluntarily to HMRC under the Let Property Campaign.
The Let Property Campaign has been open since September 2013 and is reserved exclusively for taxpayers letting out residential property across the UK.
The main benefit of voluntarily disclosing via the Let Property Campaign is to minimise the penalties imposed by HMRC for prior non-disclosure. Indeed, if you provide full disclosure and payment of any unpaid tax before HMRC discovers the issue, you could see the penalty completely removed.
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