Airbnb Landlords Beware!

Airbnb have recently confirmed that it will share information with HMRC regarding the amounts received by UK hosts with HMRC for the tax years to 5 April 2018 and 5 April 2019.

This will enable HMRC to check the accuracy of information reported on tax returns and to identify rental income that has not been declared.  If HMRC can prove that income has not been properly reported, they can open an enquiry under the discovery provisions and can go back for up to 20 years.

HMRC have advised that they will start cross checking the Airbnb data in the year to 5 April 2022. If HMRC believe that there is underpaid tax they will seek to recover this plus penalties and interest. In the worst cases penalties can be up to 100% of the tax due.

So, if any Airbnb hosts have any concerns about whether they have reported rental income received correctly, they have a short window to consider making a voluntary disclosure to HMRC. Making such a voluntary disclosure will help minimise the risk of expensive penalties.

Many landlords mistakenly assume that they are not making a rental profit because of their mortgage costs.  Unfortunately, it is only the mortgage interest element of any mortgage payments that qualifies for tax relief.  We also find that foreign landlords do not always realise that they have UK tax reporting requirements to fulfil or assume that HMRC will not be able to trace them.

We would always advise anyone who thinks they may have under declared income or made any errors on their tax returns to make a voluntary disclosure to HMRC.

We have successfully assisted a number of landlords, who were not aware that they had to report rental income to HMRC, over the last few years. In all of these cases we have been able to keep penalties to a minimum.

Photo by Kelcie Papp on Unsplash