Airbnb Hosts Should Review Tax Affairs Following Data Share with HMRC

Earlier this year Airbnb notified its hosts that Airbnb was sharing data with HMRC. The online home rental platform has been obliged to share its hosts' transaction history between 2017 and 2019. The Airbnb data will allow HMRC to launch targeted enquiries into the tax affairs of individuals who have not declared their lettings income for the 2017/18 or 2018/19 tax years. 

While hosts letting out part of their main home may not have a tax obligation because they are entitled to claim the £7,500 'rent a room' exemption, hosts letting a second or third home and receiving income in excess of £1,000 in a tax year will have tax reporting obligations. 

The deadline for HMRC opening an enquiry into a self-assessment return for 2018/19 is 31 January 2021, but the 'discovery' rules allow HMRC to enquire into earlier years, up to 20 years in some cases. The data provided by Airbnb would constitute a 'discovery' for HMRC's purposes meaning HMRC would have an opportunity assess undisclosed rental income for not only 2017/18 and 2018/19 but earlier years as well.

Airbnb hosts who may have tax reporting obligations should act quickly. There is still time to amend self-assessment 2018/19 tax returns before the 31 January 2021. If tax may be due for earlier years as well it is worth seeking professional advice and taking guidance on whether a disclosure should be made under the HMRC's let property campaign or the worldwide disclosure facility for overseas letting income.  By making a voluntary disclosure now any tax penalties charged by HMRC are likely to be significantly lower than if a host waited for HMRC to make contact first. 

Should you wish to discuss anything in more detail our experts at Sopher + Co are here to assist. Please complete our online contact form, email us at enquiries@sopherco.com or call 020 8207 0602.

-James McLaughlin, Associate Director