Airbnb has been required to share the income details of all UK hosts with HMRC to help identify people who have not paid tax on their rental earnings. Hosts that have failed to pay sufficient taxes face significant financial penalties and a 20-year tax investigation.
Airbnb and several other online rental platforms have been targeted by HMRC in ongoing attempts to identify holiday let owners that are not declaring their additional income. Data from the Airbnb website dating back to 2017-18 has been shared with the UK tax authority.
Since February 2023, HMRC has sent over 800 letters to hosts suspected of not paying enough tax, reminding them to declare income from letting out the property.
Airbnb hosts are permitted to earn a set amount of tax-free gross income each year. The current tax thresholds are:
- Up to £1,000 as a property allowance, if you are renting out an entire property and have no other income from land and property
- Up to £7,500 if you rent out a single room in your main residence (rent a room scheme)
Any income that exceeds the applicable threshold must be declared and is subject to tax. If you have not previously told HMRC about receiving rental income you are required to do so by 5 October following the year you had received rental profits.
If your failure to report and pay tax is judged to be an innocent oversight, you may avoid a penalty. However, if it is deemed to be deliberate, or deliberate and concealed, you could face criminal prosecution and penalties up to 100% of the tax owed.
HMRC is encouraging people to disclose any unpaid tax voluntarily through their Let Property Campaign, which could result in a reduced financial penalty.
Are you likely to be affected? We can help
If HMRC finds evidence that you have not paid sufficient tax on your rental property, you face significant financial penalties and could be subjected to a thorough tax investigation into your income over the past 20 years.
However, by taking swift action and making an unprompted voluntary disclosure of your rental income to HMRC before receiving a letter from them, it may be possible to mitigate the penalties arising and potentially the number of years chargeable under the disclosure.
If you need to make a disclosure to HMRC, act now and contact us ASAP for confidential advice on your situation from one of our personal tax experts.
