Author: Matthew Jeffery, Tax Director
As part of a wider investigation of the short-term lettings sector, Airbnb have been forced to share owner income details with HMRC to identify those who are not declaring their full tax liability.
In February it was reported that HMRC sent over 800 letters to hosts it believed had not paid enough tax. The Treasury suspected that more than 50 per cent of owners did not realise that income from holiday rentals were subject to tax.
Presently it is unknown how much tax is unpaid, and these measures are a way for HMRC to get a more detailed understanding of the sector. Airbnb hosts have been made aware that their data is being disclosed and Airbnb has promised to support owners when it comes to understanding their tax compliance
Those who fail to pay the correct amount of tax face criminal prosecution as well as strict penalties of up to 30 per cent of the tax they owe. If HMRC uncover evidence that hosts have not paid any or enough tax in previous financial years, it has the authority to further investigate and obtain evidence dating back up to 20 years, under so-called ‘discovery laws’.
HMRC is encouraging owners to voluntarily share their income data through a scheme called ‘Let Property Campaign’ which would lower the amount of any potential penalty.
Later this year the UK Government plan to introduce tighter regulations for the sector, whereby those wanting to run holiday letting businesses would need to obtain planning permission to let out their property on online platforms.
Zeal work with holiday letting specialist Sykes Holiday Cottages to ensure that their owners are paying the right amount of tax. As well as ensuring tax compliance we offer advice in making specialists tax relief claims available to those in the sector.
Matt Jeffery Tax Partner at Zeal commented:
“If you own a holiday letting business and are confused by the myriad of rules surrounding the sector, we encourage you to speak with a tax expert and get clarity on your tax liability. Our team can advise on how much you need to pay, alongside any tax relief you might be entitled to. You could be pleasantly surprised by the help available to owners.”
Get in touch with Team Zeal today!